Gold carves potential Wave 4 around $1815. Looking lower again

Technical Analysis:

Gold seems to have carved potential Wave 4 around $1815 levels yesterday before reversing lower again. The yellow metal has produced an engulfing bearish candlestick pattern as well, on the 4H chart presented here. Bears might be prepared to capitalize on the price action.

Also note that Wave 4 unfolded as an expanded flat corrective structure since $1760 lows earlier. This falls in line with the general guideline as Wave 2 was a flat. If the structure holds well, Gold might be on its way to terminate Wave 5 towards $1720.

Further, Wave 4 carried through fibonacci 0.382 retracement of Wave 3 around $1815 mark. This also falls in-line with the general guideline and fibonacci and wave relationships. If the above is correct, prepare for a Wave 5 decline as prices remain below $1815.

Also note that $1720 is previous support, which the bears would want to take out as next target before pulling back higher again. Potential remains to test $1678 lows before a meaningful pullback can take place. For now, bears seem to be in control as traders might be preparing to initiate fresh shorts.

Prepared by

Finacademy Technical Team