GEOMETRY OF GOLD: 24.01.2021

As I outlined in my last week Geometry write-up, the stock moves during this week supported the hypothesis that the gold futures are consolidating before another wave down. Let’s have a look at the details.

The price continued to fluctuate within the flag’s channel. Even though it moved above the 8 EMA, I view this move as a temporary one. There is one more week until the January monthly candle is finalized and many events can happen. I am moderately bearish from the monthly perspective.

This is the most eventful chart this week. Note that the price jumped off the 50 MA and touched that upper boundary of the channel, above 8 and 20 EMA. However, it was rejected and closed just one pip below the 20 EMA that is still crossed bearishly the 8 EMA. The range between 20 EMA and 50 MA is narrowing and I am not convinced that it has a good chance to break upwards. I view this situation as moderately bearish. If the next week candle closes below this week low, 1800.80, this would complete a strong bearish continuation pattern and forecast further southbound move of the stock.

None of the candles this week closed above the midpoint of the huge red candle of January 8 and I continue to view the build-up as a healthy bearish consolidation before a move down. Note that the Friday’s candle closed few pips below the 20 EMA and also below the 200 MA. The daily price has technically no support. I view that the odds are strongly bearish.

Waves and Targets:
Based on aforementioned, I continue to expect a wave down that could be either a strong motive or a more shallow and less predictable diagonal wave. My current target is somewhere between 1640 and 1440, depending on the wave’s structure. I think that the wave could end in the rectangle that I placed on the chart above and that the wave could last for 2-4 months.

The next week closure and, most importantly, the month closure would help to forecast the gold futures moves for the following several months. I am viewing the odds for the next week as moderately bearish.

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