Bounce in Gold Underway?There’s a lot of overhead resistance in the form of horizontal levels, SMAs, and trendlines, and the Bulls would be better off waiting until there is confirmation.
In my previous and first update for Gold, I assessed, using the Elliott Wave Principle (EWP) and Technical Analyses (TA), if it was ready for a bounce before the next leg lower. It was trading at $1723 back then.
Two weeks later and the instrument dropped a little lower than the ideal “equal length” (see Figure 1) would like ($1670 vs. $1725), over the next few days, only to now rally slightly back above to where it was back then ($1723 vs. $1733). Thus the “thick” orange path I had drawn in appears to be transpiring, albeit with some slight initial undershoot.
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Figure 1. GOLD daily chart with detailed EWP count and technical indicators.
A Bounce followed by the next move lower still most likely
Back in early March, I anticipated “this bounce to last several weeks and target the declining 200-day Simple Moving Average (200d SMA), now at $1860, but it should be at around $1820 horizontal resistance by then.” If I adjust the current anticipated orange path lower (from the start of red, intermediate, wave-a?), then we should indeed see close to $1820+/-20. That should complete red wave-b? similar to the bounce from September to October 2020 (thin orange arrows). From there, the last decline (red wave-c?) to ideally around $1640+/-20 should follow to complete the mirror image of the initial drop in 2020 (black, major wave-a). In EWP-terms, this would then be a double zig-zag.
Such a lower low will then, ideally, set up a nice positive divergence on the technical indicators (green dotted arrows), signaling the next leg higher is to commence. It is not necessary but preferred. The market does not owe us anything, so we have to wait and see. But, Gold will have to move to and close above $1870 from current levels to tell us the early-March low was already blue Primary wave-IV, and wave-V to new ATHs ($2300+/-100) is then underway. For now, that is not my preferred POV, neither does the chart even remotely tell me that is the case.
Bottom line: The early-March anticipated bounce is now most likely underway and should ideally move Gold to around $1820+/-20. From there, I still “expect several weeks of downside back to $1620-1680. After that, I anticipated the next Primary-V rally to ~$2300+/-100. However, a weekly close below $1605 targets $1495 and strongly suggests a Primary-V wave may not happen as the decline is almost too deep for a wave-IV, and the odds are not in favor of it anymore.”