Gold swell only correction amid downtrend: Elliott Wave

A sharp reversal in gold (COMEX:GCG14) from $1,181 suggests that the decline from $1,267 is a completed five-wave move, so the current upward reaction should be a temporary corrective retracement. Corrections are three-wave patterns, so be aware of more upside after current wave (b) that could find support around the $1,210 area. Swing zone for possible resumption of a larger downtrend comes in at $1,267, but after we will be able to count three legs up.

GOLD four-hour Elliott Wave Analysis

On the daily chart, gold is trading nicely lower since the start of September, after the break and through the rising trend line of a corrective channel. We knew at the time that it was an important signal for a change in trend, which means that bearish price action is now back in play that also accelerated at the end of December, so we assume that price is moving down in a larger wave 5) heading through the $1,180 June low. The current bounce is probably just another sub-wave rally in the middle of a bearish trend. Resistance is seen around $1,250-$1,270 from which a new sell-off could occur, but after three legs.

GOLD Daily Elliott Wave Analysis

On the intraday chart, gold is moving sideways for the last 24-48 hours, so we assume that price is still heading lower within wave c) of (b) that may look for a support around $1,210, beneath $1,215 spike low and near the 61.8% Fibonacci retracement level.

GOLD Intraday Elliott Wave Analysis

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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