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.

Monthly:
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.

Weekly:
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.

Daily:
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.

Summary:
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.

%d bloggers like this: