Gold tests resistance close to $1916/17 yesterday

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