Bottom line:  Gold bearish structure could remain until prices stay below the $1689 highs print on February 24, 2020. A drop from here below $1563 would complete 5 waves lower from $1689, indicating further weakness ahead.

Technical Analysis:

Gold has been under control of bears since $1689 highs. The yellow metal had reversed sharply since then and hit $1563, just shy of $1550 support. Looking at the immediate wave counts since $1689, Gold has produced 3 waves until now. If prices remain below $1625 and print yet another low towards $1550, it would be a clear 5 wave drop from $1689 through $1550. If the above counts turn to be correct, Gold would be ready with either Wave A of a larger corrective drop or Wave 1 of an impulse lower. In either case, selling on rallies might be considered as a safe trading strategy. Alternately, if prices rally ahead of $1625 from here, the drop from $1689 through $1624 could be labelled as wave 1, subsequent rally towards $1660 could be wave 2 and thereafter the sub waves could be waves I and ii as wave 3 progresses lower. Only if prices manage to break above $1660, the above bearish counts could be invalid. Believe it or not, even if Gold manages to push ahead of $1689, the rally could be shallow and it could just be a matter of time before the yellow metal comes crashing lower. Most traders could either be short or might be willing to sell in rallies with a protective stop above $1689 and projected targets below $1550 in the short term and below $1260 in the long term. Looking into higher degree wave counts, Gold might have possibly terminated Wave (Y) within a (W)-(X)-(Y) counter trend rally at $1689 and might be preparing to reverse lower.

Prepared by

Harsh Japee, Technical Analyst.

Gold Chart

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