Bottom line:  Gold bearish structure is firmly intact until prices stay below $1703 mark going forward. After having dropped over 250 points, expect a counter trend rally to materialize towards $1610/50 levels, before the drop continues.

Technical Analysis:

Gold is firmly in control of bears, crashing over 250 points since printing $1703 highs on March 09, 2020. We have been presenting a potential bearish scenario since last several weeks and that the upside was limited. It was mentioned in our discussions held last week that a break below $1560, would confirm that a meaningful top is in place. Gold has not only taken out $1560 but has almost dropped to $1445 levels, Wave B on the charts. With bears having taking out a major support we can confirm the following: 1. Trend is now bearish against $1703. 2. Bulls might be preparing for a 3 wave counter trend rally towards $1610/50 levels before giving in to bears again. Looking into the immediate wave structure, Gold has carved an impulse between $1703 and $1445 respectively, labelled as Wave 1. A corrective rally could materialize towards $1610/50 in the net few trading sessions, as potential Wave 2. Going further, a Wave 3 drop should resume lower towards the May 2019 support at $1262 and further. Most traders might take some profits on the short positions taken earlier and remain flat, allowing a corrective rally before going short again. Looking at the larger degree wave counts, we can now confirm that Gold has terminated a multi-year corrective rally (W)-(X)-(Y) that began from $1046 lows in December 2015, at $1703 levels on March 08, 2020. Wave (X) was a triangle spanning for over 3 years and terminated at $1262 in May 2019. Finally, Wave (Y) was an A-B-C rally that terminated at $1703 levels before reversing.

Prepared by

Harsh Japee, Technical Analyst.

Gold Chart

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