In my several previous analyses I was expecting a horizontal development until the direction is established. Today’s closure put the gold spot at the crossroads from the candles perspective, pushing the decision to the next week when the monthly candle be printed. Let’s explore.
The monthly XAU candle began the month well. In the middle of the month it was rejected at the 8 EMA level and is balancing between 8 and 20 EMA. Waiting for April 30 for a decision.
Odds: Neutral – Moderate Bearish
This week the stock closed with a rather rare long-legged doji after a rally. The odds has shifted to the dark side. The similar weekly candles were also formed in gold futures in GDX.
The task for the next week is very simple.
– closure above 1797.91 – bullish continuation;
– closure below 1763.74 – bearish reversal.
On Thursday, the gold spot, gold futures and GDX formed Bearish Engulfing and today they all confirmed it. I posted the Alert on GDX yesterday at the end of day.
The confirmed reversal means that at least at the beginning of the week we should see the lower prices. Whether this pullback would be sufficient to confirm the weekly reversal or it would be shallow, allowing a rally to confirm bullish continuation, this remains to be seen.
I added a possible bearish Elliott Waves path (ABC) in blue on the weekly candles chart. If the bearish reversal is confirmed, I would be expecting XAU to fall to 1600-1500 in the next several months.
I will share a bullish path once the odds shift to the bullish side.
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