Gold has managed to reach up to $1798 levels in the past few trading sessions. The rally might be seen as Wave Y within a W-X-Y complex correction. Also note that the yellow metal has almost tested the fibonacci 0.618 retracement of potential Wave 2; bearish reaction remains high probability.
Gold has been dropping since $1960 highs on January 06, 2021. It has already terminated Waves 1, 2, and 3 around $1800, $1875 and $1676 mark respectively. Since then, it has been carving a complex structure to terminate Wave 4.
The yellow metal seems to have unfolded as a 3-3-3 (W-X-Y) combination and terminated around $1798 yesterday. If the above proposed wave structure holds well, Gold should turn lower soon towards $1650 as Wave 5 unfolds.
Immediate support is at $1765 while resistance is around $1820 levels respectively. A break below $1765 would confirm that a meaningful top is in place around $1798 levels. Furthermore, a break below the counter trend line support would be encouraging to bears.
Alternately, if Gold continues to rally past $1820 mark, it might indicate a potential threat to $1875 resistance, going forward. At this point, a continued rally remains remote probability and that bears are expected to regain control soon.
Gold remains vulnerable for a bearish turn from current price action ($1790). It is not shown here, but also note that RSI on 4H chart has produced a bearish divergence. Watch out for a break below $1765 in the near term.
Finacademy Technical Team
Gold prices dropped through $1773 lows on Thursday before finding support again. The drop from $1793 was in-line with price action of a gartley.
The US dollar index might have carved a lower high around 96.50 mark on Tuesday. The index dropped through 95.80 levels on Wednesday before finding some support.
USDJPY is soon approaching a formidable resistance zone around the 114.40-50 mark. The currency pair has been carving a corrective rally since 112.50 lows.