Gold Uptrend Offers Similar Wave-4 Pullbacks on Two Time-Frames

Gold (XAU/USD) made a strong bullish bounce at the 38.2% Fibonacci retracement level. This is probably a wave 4 pullback, which means that more uptrend is still expected.

This article reviews the Elliott Wave patterns and Fibonacci levels on the XAU/USD weekly and 4 hour charts.

Price Charts and Technical Analysis

The XAU/USD seems to have completed a strong bullish impulse, which has been labelled a wave 3 (purple). An ABC pattern (pink) took price back to the 38.2% Fibonacci level, which acted as a support zone. Price action broke above the 21 ema zone and resistance trend line (dotted orange) as well. Let’s analyse what to expect next:

1. The bullish impulse and breakout (blue box) above the 21 ema zone is strong. A retest of the previous top is likely (first green arrow).
2. A sideways bull flag pattern (orange arrows) could indicate that the uptrend is dominant (second green arrow).
3. A strong bearish bounce (dotted orange arrow) indicates that the wave 4 (purple) pullback will expand into a larger and more complex ABC pattern.
4. The previous bottom should still act as support (dotted blue arrow).
5. The main targets are the -27.2% and -61.8% Fibonacci levels at $2319 and 2634. Round levels like $2250 and $ 2500 are also targets.
6. A break below the 50% Fib places this Elliott Wave outlook on hold (orange circle) and a deep retracement invalidates it (red circle).

On the 4 hour chart, price action seems to be developing a strong bullish impulse. This is probably a wave 3 (grey) of a wave 3 (pink):

1. The pullback respected the 38.2% Fibonacci as well, which is probably a wave 4 (orange).
2. A bearish ABC (green) pattern is expected to develop within wave 4 (orange).
3. A bullish bounce is expected at support (blue arrows).
4. A bull flag pattern (grey arrows) could indicate an immediate uptrend (green arrow).
5. A break below the 50% Fib places this Elliott Wave outlook on hold (orange circle) and a deep retracement invalidates it (red circle).
6. The main targets are the Fibonacci targets at $1960, $2016, $2078, $ 2179, and $2234 for the wave 3 (grey).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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