As discussed in the weekly analysis, gold continued a rally today. However, the candle formation and EW suggest that a pullback is ahead. Let’s have a look from different perspectives.
Gold formed a Deliberation pattern which typically expects a short-term pullback or a horizontal movement.
From the technical perspective, the longer term indicators support a move higher, but the metal is overbought on the smaller frames and would require a few days before normalizing this condition.
In rare cases, a Deliberation could trigger a reversal, but there are no signs of it yet. If gold makes a strong bearish candle tomorrow, e.g. closing below $1818, the odds would flip to the dark side. But so far, the odds are bullish-neutral.
Gold is in an inflection area as shown on the short term chart.
I am currently tracking two counts:
- Blue (primary).
The metal has completed or about to complete wave (i). A retrace to $1800-1785 is expected.
In case the retrace goes deeper, the green count.
The count assumes that the current wave is the last sub-wave of wave D of a bigger triangle. The retrace (wave E) could go towards ~$1700.
Both scenarios and the long term chart were discussed in the Weekly Analysis yesterday – link below.
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