I am expecting at least a minor pullback in the next few days. There are several reasons for that. Let’s explore them 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. The price moved too far away from 8 EMA line and is expected to pull back.
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 $1819, the odds would flip to the dark side. But so far, the odds are bullish-neutral.
Gold seems to have completed wave (i) and a pullback in wave (ii) is expected. The target can be rather wide: $1817-1787.
I am currently tracking two counts:
- Blue (primary).
The metal has completed or about to complete wave (i). A retrace to $1817-1787 is expected.
In case if the retrace goes deeper, the green count would take place.
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 longer term perspectives and charts were discussed in the Weekly Analysis on the weekend – link below.
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