Gold could retest $1,180 June low: Elliott Wave

Gold (COMEX:GCG14) reversed sharply to the downside at the start of September, through the rising trend line of a corrective channel. As we know, that's an important signal for a change in trend, which means that bearish price action is now back in view that could accelerate to the downside soon if we consider recent break of $1,251 swing low that confirms a completed wave 2 and wave 3 underway to the lows. From a larger perspective, we believe that gold will continue to weaken, toward $1,180 and to $1,130 in the next few weeks.

On the four-hour chart, gold has been trading higher since early December, but recovery was made only in three legs, labeled as a)-b)-c) on the chart. We know that a three-wave move is structure of a corrective price action that now appears completed after recent sharp fall from 1267. Decline is looking impulsive so we believe that is part of a larger downtrend.

On the short-term chart we can see that price is moving nicely lower, clearly in impulsive fashion from this week highs. We see price moving down in wave iii that could look for some temporary support in $1,210-$1,215 region. From there, be aware of a short-term retracement back in wave iv which could be good for intraday traders to join the downtrend.

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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