Gold is testing its recent highs at $1820 mark at this point in writing and is expected to face resistance again. The long term structure still constructs a bearish picture but the yellow metal needs to break below $1790 support to confirm a meaningful top is in place.
Gold’s larger degree wave structure continues to remain bearish against $1920 highs in 2011. Please note that the yellow metal had dropped from $1920 through $1046 highs, sub-dividing into 5 waves. The impulse drop had confirmed that there is still further room left.
A 5 wave movement in a particular direction confirms that the move is incomplete. We need to see yet another 5 wave movement towards the same direction, after a corrective wave. Hence, structurally Gold should print below $1046 to complete the corrective phase.
The wave structure is as follows: Gold had earlier dropped between $1920 through $1046, sub-dividing into 5 waves, labelled as Wave (A) on the weekly chart. Ideally, an impulse is followed by a corrective wave, which can be seen as A, B, C on the chart.
The corrective wave has also reached its fibonacci 1.618 extension around $1799 as seen here. Gold has further extended its rally towards $1820 levels. The yellow metal should produce a bearish reversal from current levels soon and break below $1790.
Once the above structure unfolds, we can confirm with certainty that Wave (B) is complete around $1820 levels and that Gold is now heading lower towards $1046 levels, as Wave (C) progresses further.
Remain flat for now and allow a break below $1790.
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