Gold is completing dual reversal patterns and might extend the current gains. The following Gold Elliott wave analysis shares useful insights.
May 05, 2019 | AtoZ Markets – XAUUSD has been bearish from 1346 in late February. However, it looks as if that will end as the commodity continues the bullish trend that started in August 2018.
Gold has been on the downside since late February when the commodity lost its safe-haven appeal following more demands for the Dollar. At the time, the market expected a successful trade deal talks between US and China. However, there has been renewed tensions concerning the trade talks after a series of tweets from President Trump raises concerns.
The precious metal has been uptick since Friday despite a better than expected NFP. It started the new week with a bullish gap amidst renewed US-China trade tensions. Last week, price bounced off the April low at 1266 and now attempts to break into the 1280-1300 strong resistance zone. The market will anticipate important inflation data from the US this week and probably get further clues for short-term moves. The US-China trades headlines are very much likely to cause spikes in the dollar-denominated commodity.
Gold Elliott wave analysis and important price levels
From a technical perspective, XAUUSD price is about completing a double bottom pattern at 1266 with neckline at 1288-1290. A fast break above this zone will see price advancing toward 1310, 1325 and 1346 price resistance levels which are April, March and February highs consecutively.
From Elliott wave perspective, the price could resume the bullish impulse wave rally from 1160 (August 2018). the dip from 1346 seems to be completing a zigzag wave 4 dip. In the last update, we expected the last leg of the 4th wave zigzag pattern to end at 1260 with an ending diagonal pattern. The chart below was used.
However, the 5th leg of the diagonal was truncated, therefore there was no hit of 1260 before price rallied above 1280 resistance level. This leaves us with two high probable scenarios.
Gold Analysis: 1st Scenario
The scenario above suggests the diagonal is not yet over. The current upsurge is part of the 4th leg of the diagonal and is expected to stay below 1289-1290 zone. The 5th leg to 1257-1250 (100% Fib-extension of wave (a) from (b)) should follow. If otherwise, price bridges above the wave (a)-(b)-(c) channel as the chart below shows, 1266 will be the new low.
Gold Analysis: 2nd Scenario
An impulse wave break above the channel suggests price has finally committed upside with a double bottom reversal pattern at 1266. A 3-wave bearish correction should follow before the price continues toward 1346 or above with a larger degree impulse wave or a leading diagonal pattern.