Gold Elliott wave analysis: price stabilizes around 1500 after massive upsurge

Gold is moving sideways after the continuation of the multi-year rally to 1500. The following looks at what could happen next based on the Elliott wave theory.

August 09, 2019 | AtoZ Markets - The yellow metal goes sideways as it approaches a diagonal reversal zone. The dollar-denominated commodity has been among the biggest gainers since late 2018, breaking higher levels to reach 1500 this week. The trade tension and the many rates cuts by the Central Banks as a result of rising fears of recession have led investors to search for alternative and safer investment assets. Gold is a safe-haven commodity and has so far risen to its highest price in six years. The falling US Treasury yields also supported the bullish run.

Meanwhile, the Gold price has entered into a range shortly after it hit 1509 on Wednesday. Price has gone back and forth within the 1509-to-1490 range. To the upside, the price could hit 1550 and if not resisted, the 1600 handle will welcome the bulls. On the other side, price is just at the lower boundary of the 1500-1550 diagonal resistance zone. A dip below 1490 low might lead to further dip to 1475 in the short term. The bears will most probably have won the race temporarily if price breaches below the 1452 critical resistance-turned-support level.

Gold Elliott wave analysis

From the long term perspective, a bullish double zigzag pattern is emerging since 2016. However, price is in the final stages which means a bearish correction might soon follow. In the last update, we checked the last sub-wave of this pattern with the hourly chart below.

We identified a reversal zone at 1500-1550. After breaking above 1500, price retraced and has now gone sideways. With this wave formation, there might still be a more minor rally to 1550 or prices around it before the bears creep in. However, a solid bearish reversal zone should be watched. If the breaks fast above 1550, the next target level is 1586 which is a long term 61.8% Fibonacci retracement level explained in the last update. The chart below takes a look at the current sideways move.

The last leg is completing an impulse wave as a wave (c) of a larger zigzag pattern. The current sideways move between 1509 and 1490 might complete a triangle pattern above 1490 or a minor zigzag to 1475 or even a flat pattern before picking up toward 1550.




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