So far, gold follows the channel outlined last week. Expect the horizontal moves between $1800-1760 for a few days before resuming the correction. Let’s explore the metal from different angles.
Last week gold completed a strong Tower Top formation that signals the lower lows. The indicators are supportive of the move.
Odds: Strong Bearish
There is a string of bearish candles on the daily frame. We have yet to see a first sign of bullish reversal. So far it looks like gold is taking a pause before resuming the slide.
Gold is likely to continue horizontal moves between $1760-$1800 for a day or two to complete wave 4 as on the chart above. After that, expect a rather strong wave 5. Two most typical targets for w5 would be $1720 and $1660. As for metals, waves 5 tend to be the longest, $1660 has higher chances.
However, as at this point is not clear whether wave 3 actually ended, there is a possibility that the structure being developed is a bearish flag/pennant and wave 3 could be extended. In this case all targets would move further down. We would know this later, hopefully by the end of week.
The mid-term targets (red rectangle) were identified on the chart below in the Weekly Analysis. Everything stands for now.
Note that a strong bullish move with a daily closure above $1825 could signal a trend reversal. Though, the odds are slim for this scenario.
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