Bottom line:  Gold remains bearish until prices stay below $1520 resistance. A bearish reversal here could drag prices below $1445.

Technical Analysis:

Gold is testing the fibonacci 0.618 retracement of the recent drop between $1520 through $1445 around $ 1490/91 levels respectively. A bearish reversal could be expected around these levels, pushing prices towards $1415 levels going ahead. Please also note that Gold is trading very close to the trend line resistance connecting previous highs at $1557 and $1520 respectively. A high probable trade setup from here could be on the south side, against $1520, with potential targets below $1445 and towards $1415 respectively. Alternately, a break above $1520 would be a confirmation that the yellow metal has formed a meaningful low at $1445 earlier and that bulls are poised to push towards $1580/90 levels to terminate Wave C within Wave (Y). Looking at the overall wave structure, Gold has been in a counter trend (W)-(X)-(Y) since $1046 lows carved in December 2015. Wave (X) had unfolded into a multiyear triangle setup terminating around $1260 levels in May 2019. Since then, Wave (Y) has been unfolding a 5-3-5 (A-B-C) wave structure. Please note that Wave A unfolded into 5 waves, between $1260 and $1557; Wave B potentially unfolded between $1557 and $1445 (it could still terminate around $1415 levels) respectively. If the above structure is true, Wave C of (Y) could be soon underway, from current levels or from $1415; towards $1557 and higher, going forward. A potential termination of Wave (Y) is seen towards the $1580/90 levels, which is also fibonacci 0.618 retracement of the earlier drop between $19xx and $1046 levels respectively. An aggressive trade setup from here could be on the south side with stops at $1520, while a more conservative approach could be to remain flat and look to buy lower around $1415 levels.

Prepared by

Harsh Japee, Technical Analyst

Gold Chart

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