Gold (COMEX:GCV13) has turn bearish last week and made a sharp decline toward $1,300 with a look of an impulsive price action; strong and large move in the short period of time. As such, we believe the metal is in a new bearish period that could bring price even back to June lows. We will be looking lower. With that said, to take advantage of the current down move it’s important to keep an eye on intra-day wave patterns and any evidences of a corrective or contra-trend patterns that will give you an opportunity to join the trend.
On the hourly chart, we see a sideways movement in tight range, which is a very important guideline for a correction, or temporary pause within downtrend. From an Elliott Wave perspective we see current pause as a triangle, which is a continuation pattern most likely placed in wave four. As such, we anticipate a thrust out of a triangle into wave (v) that could reach levels around $1,280 in the next 24-48 hours once $1,300 support is taken out.
Gold 1h Elliott Wave Analysis
A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.
• structure is 3-3-3-3-3
• each subwave of a triangle is ussaly a zig-zag
• wave E must end in the price territory of wave A
• one subwave of a triangle usually has a much more complex structure than others subwaves
• appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes