Gold – Monthly Analysis

CANDLES

Gold has triggered a record-breaking bearish MACD signal on the daily frame—an early but significant warning that could mark the start of a long-term shift. While there’s still a possibility of another all-time high, that path remains undecided. For now, momentum has only taken the first step. If this trend expands to the weekly frame in the coming weeks, the signal will gain much more weight.

April closed with a bullish monthly candle, but one that carried subtle bearish undertones and pushed key indicators further into overextended territory. On the shorter time frames, the daily and 2-day charts have confirmed a top, while the 3-day and weekly frames have initiated bearish structures that could complete as early as next week.

At this stage, gold holds a moderately bearish short-term outlook.

We will keep the following paragraphs, written on March 28, as a long-term reference:

Gold is now dramatically overbought across all time frames—up to and including the annual chart. It has also been diverging from multiple indicators across several mid- and long-term frames. One key example is the RSI.

The chart below shows the monthly RSI, which is now sitting at levels last seen in 2006, 2008, 2011, and 2020—each followed by significant declines. There’s also 1980, but that extreme was excluded from the statistical analysis as an outlier.

If a reversal is triggered at current levels, gold could shed anywhere from 20% to 45% of its value, with an average decline of 31%. Take your pick—and be prepared. A strong bearish weekly signal is likely to be the trigger.

As of April 18, gold has pushed the monthly RSI to its second-highest level since 1980—a historically extreme reading. With momentum this elevated, the setup suggests that the initial move down could be quite sobering, potentially marking the beginning of a broader correction.

ELLIOTT WAVES

If gold has indeed completed—or is on the verge of completing—wave III (with supporting evidence for the blue scenario), then according to Elliott Wave principles, wave IV (or alternate IV in red) would typically find support in the region of wave 4 of a lower degree. In this case, that zone extends down to approximately $1100, marking the lower boundary of the likely target area.

Another key consideration is the Rule of Alternation. Since Cycle Wave II was a prolonged, complex correction lasting nearly 20 years, it would be typical for Cycle Wave IV to contrast in form—potentially unfolding as a sharp zigzag over just a few years, ideally staying within the bounds of the long-term trend channel.

On the micro level, gold has formed a clear impulsive move down and may be developing an impulse of a larger degree (red count). The blue path, which includes a potential new all-time high, remains on the table as the current wave down is still in progress and not yet fully defined.

Summary:

After a strong bullish performance in March, gold softened its tone with the April close, introducing the possibility of a reversal—but not yet confirming one. While no clear bearish signal has appeared on the monthly frame, smaller time frames have started to build a bearish case, and that pressure clearly influenced the monthly print. Several record-setting bearish technical events now suggest that if downside momentum continues, conditions could deteriorate quickly. As noted last week, cracks are beginning to show on the candle map—and those cracks appear to be widening. The risk of reversal has increased.

From an Elliott Wave standpoint, gold may have completed a major top and initiated an initial impulsive decline. Following a corrective bounce, it now appears to be developing an impulse of a higher degree—though the structure is still evolving.

While a reversal may have begun, confirmation is still pending. After such a strong rally, the next phase must be validated with a clear bearish close on the weekly frame and supporting signals from larger time frames. Patience remains key at this stage.

Happy Trading!