Gold tests resistance close to $1916/17 yesterday

Written by

June 2, 2021

Technical Analysis:

Gold had raised through $1916 highs yesterday before turning lower again. The yellow metal remained just shy of $1922 mark, which is fibonacci 0.618 retracement of the entire drop between $2075 and $1676 levels respectively.

If the recent price action is a lower degree wave iv within Wave C, Gold might rally back towards $1922/25 levels to terminate wave v. Alternately, a break below $1880/82 would confirm a bearish reversal ahead.

The entire wave structure from $2075 highs is a 3-3 until now. The drop between $2075 and $1676 was in 3 waves a-b-c; while subsequent rally towards $1916 is also in 3 waves. If Gold is unfolding as a flat, we can expect a 5 wave drop from here.

Gold might drop through $1450 levels in that case. Alternately, if the yellow metal is unfolding as a larger degree ending diagonal, we could witness a continued drop towards $1046 and beyond. Either way, the most probable output is a decline from current levels.

Gold faces immediate resistance around $1922, followed by $1960; while support comes in around $1882, followed by $1800 levels respectively. It remains to be seen how price action behaves around $1882 levels in the near term.

Most traders might prepare to initiate fresh short positions around $1900/20 levels with risk above $1960 over the next few trading weeks.

Prepared by

Finacademy Technical Team

Related Articles

US dollar index is bearish against 97.00

US dollar index is bearish against 97.00

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.