GEOMETRY OF GOLD: 17.01.2021

This week analysis of gold futures movements and candles provides enough material to forecast a further move down, possibly a strong and deep one. Let’s explore the hypothesis.

Monthly:
This week gold futures made one more step towards cancelling the large green candle of December. The price moved below monthly 8 EMA and is staying within the downward channel. There are two more weeks, but the perspectives are moderately bearish for now.

Weekly:
This week closed below the close of the previous week, thus confirmed the humongous Bearish Engulfing of the previous week. The price tested the bearish 8/20 EMA cross and closed below 8 EMA. The odd are strongly bearish and there is a possibility of a gap down below 50 MA (approximately 1810).

Daily:
All five daily candles this week can be viewed as a healthy bearish consolidation at the bottom of the large red candle prior to resuming the downward move. Note that the price unsuccessfully tried to break above 200 MA – not a healthy sign if you are a bull. The odds are strongly on the bears side and the next week could be a big red week.

Waves and Targets:
I continue to maintain that the stock is working on a zigzag formation that I first identified on December 17, 2020. There is a possibility that the final wave of the zigzag – wave (C) – is underway. Wave 1 of (C) looks complete and wave 2 is about to. If so, wave 3 of (C) is about to start in the next 2 days with a minimum target of 1660-1640 to be achieved in the next week or two.

Summary:
I view that gold futures could lose about 200 points in the next few weeks. There is a possibility for a deeper fall, however, I would be relying on the behavior of the wave down and, in particular, on the monthly and weekly candles that will form in the next two weeks. They will be the determining factor for my further analysis and forecast for the stock.

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