Gold is seen to be trading below $1800 mark as we prepare to publish today’s update and a slip below $1795, would trigger price action for further sell off towards $1750/60 initial support. A break below $1750 would be the first step for a potential trend reversal.
Looking at the larger degree wave counts presented on the weekly chart, Gold might be indicating the following. The metal had topped in 2011 around $1920 levels, and reversed lower. The drop unfolded into clear 5 waves, and terminated around $1046 in December 2015.
A 5 wave movement in any direction indicated the following: Either a new trend has resumed or it is the first wave of a corrective phase (3 waves). Either way, Gold was due in for a corrective rally before turning lower again.
The corrective rally unfolded into 3 waves, A-B-C on the chart here. Please note the fibonacci extensions for the termination of Wave C were around $1798/99. Gold has managed to reach up to $1818 levels over the last week and it remains possible that the metal might have topped.
With respect to the wave structure, we need to see a break below $1750/60 at least, to confirm a potential bearish reversal. On the weekly chart, a break below $1670 support would confirm a bearish reversal. Either way, please note that upside remains limited from here.
Gold remains critical at this juncture and also vulnerable for a potential bearish reversal ahead. A break below $1750/60, confirms.
We remain flat for now. Looking to sell again.
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