Gold Technical Analysis, August 25, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

Gold has been drifting sideways into a potential contracting triangle, after having carved a meaningful top around $2075 earlier. This could be a consolidation phase after the religious rally since $1262 lows in May 2019, before the metal reverses lower again.

Gold might be either producing a bearish triangle as a lower degree Wave 2 OR is consolidating in a bullish triangle Wave 4, before producing a thrust wave higher. High probability remains for a bearish reversal after the triangle termination with potential top in place at $2075.

Gold has been in a corrective phase since 2011 highs a $1920. The yellow metal seems to be unfolding into an expanded flat corrective wave since prices have exceeded the $1920 highs. It seems to have formed a potential top or might print one more high before reversing.

Either way, bears are poised to resume lower from current levels or after a thrust rally above $2075 levels. The expanded flat structure seems to have terminated Wave (A) between $1920 and $1046 levels. Since December 2015 lows, it has been into Wave (B) corrective rally.

The above Wave (B) might have completed A-B-C wave structure around $2075 recently. If the above proposed wave counts are correct, Gold should remain below $2075 and break below $1862, going forward. Watch out for a triangle termination below $2075 mark.

Wave (C) should resume lower towards $1450, $1262 and beyond. Ideally, an expanded flat would terminate Wave (C) below Wave (A), which is $1046 mark. Sooner than expected, the metal should be an ideal candidate to be sold on rallies.

Trading Strategy:

Short against $2080, targeting below $1046.

Legal Disclaimer: This article is not investment advice. The data provided is for marketing material purposes and is not intended to confuse nor guide our clients on trading decisions. Any investment activity performed is perceived to be a self-directed decision. Exclusive Markets is not liable for losses that may occur because of a decision made after reading the information published on our research page or any other media.

Risk Warning: Trading the capital markets is risky therefore further knowledge and experience may be required. Apply appropriate risk and money management always and ensure the implementation of safe leverage.

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