Gold resumed upside on Thursday after it dipped close to 1300. The following give technical insights based on Elliott wave theory.
February 04, 2019 | AtoZ Markets – Gold is pointing to the upside, above 1310 after the bearish pressure that dominated this week was halted close to 1300. The yellow metal lost up to 1.75% of its value between Monday and Wednesday when it dropped to 1300 after an impressive bullish run that started at 1160 many months ago. Despite the 1-week corrective dip, the trend is still bullish and this precious metal seems to have an eye at 1360-70 price levels. How well will it go in the coming weeks?
In the last update, we expected the dip from 1325 to continue toward 1300 support level. From 1160, we counted a bullish impulse wave. Price completed the 3rd wave of the rally at 1325 and a 4th wave dip was to follow. However, often times, the 4th wave of an impulse wave corrects to the 4th sub-wave of the 3rd wave of the same degree. With this in mind, we believed that there is a chance that the current correction continues into the 1298-1277 4th wave territory. There is a barrier at 1298-1300 which might act as a support zone for the bullish trend to further its course. The chart below was used in the last update.
Price completed the required zigzag correction just above 1300, as expected. But, is it enough? Will there be a a price dip below 1298 into wave iv of (iii) territory? The best way to check this out is to analyze the wave (iv) dip.
Gold Elliott Wave Analysis and Important Price Levels
A zigzag has completed at 1302 to probably mark the end of wave (iv) (in blue) of the impulse wave from 1160. If this is the case, the 4th wave would be very shallow and such scenario are usually less likely to happen. A bearish double zigzag comes to mind especially if price stays resisted at 1317-1320 intrada day resistance zone. A dip to 1280-90 could happen afterwards. If the bullish run returns, notwithstanding of this expectation, a break above 1320 and eventually 1326 would happen.