Gold bounced at 1459 on Tuesday to 1485. Will the bullish trend continue? The following Gold Elliott wave analysis shares some technical analysis insights.
October 02, 2019 | AtoZ Markets – The yellow metal rejected further decline at the 1451-1463 support zone on Tuesday. It quickly rallied to 1487 afterwards. On Wednesday, price also pointed upside during the London session. The bullish momentum is, however, not strong enough yet to cause a big push for the long-term bullish trend to resume. Meanwhile, the dip from 1557 to 1459 completed a corrective pattern. Are the bears done? Will the bullish trend resume?
The gold price has been excessively bullish for many months. The zero-yielding metal rode on the back of global economic worries and geopolitical fights that have created an uncertain investment atmosphere. However, the commodity had its longest and biggest dip since July/August 2018. The decline started at 1557 about a month ago. When it dipped to the critical 1451-1463 support zone, a strong bullish signal was needed to cause a sharp bounce. The Tuesday US PMI data came very poorly and Gold bulls had what they needed. The news hit the stock market and USD plummeted. The US treasury yields also dipped significantly. Investors ran to Gold and its demand soared again and its price quickly bounced to 1485 and may soon hit above the 1500 handle.
Gold analysis: important price levels
Resistance Levels: Once the price breaks above 1500, the next target will be 1535 and 1557. The long term bullish target is at 1800 after 1600 is breached.
Support Levels: The 1451-1463 support zone is currently holding the price. Below this zone, there are support levels at 1400 and 1375.
Gold Elliott wave analysis
In the previous updates, we identified the bullish trend emerging into an impulse wave toward 1800. In the last update, we looked at the dip from 1557 and discovered a zigzag dip was emerging. We also drew a reversal zone at 1451-1463 where the corrective pattern was expected to end. We used the chart below in the last update.
Price dropped to the support zone and bounced to 1487 just as expected. The new chart below expected an impulse wave breakout of the 1-month old zigzag pattern.
Wave (i) could continue to 1500 but a wave (ii) retracement might happen to shake out all the bears before a massive launch to 1600. This forecast will be invalid if the dip returns and break below 1451.