Gold tests support around $1770 mark

Technical Analysis:

Gold prices dropped sharply to $1770 on Tuesday completing a potential zigzag correction that had begun since $1793 earlier. The drop between $1793 and $1770 can be subdivided into five waves, while subsequent rally through $1791 was corrective three waves.

Gold’s drop through $1767 might have completed the 5-3-5 corrective zigzag and the yellow metal could be preparing to stage a rally soon. If the above structure holds well, prices should rally through $1812 and $1830 levels respectively, going forward.

Looking at the short term wave counts, Gold has carved a leading diagonal between $1762 and $1793 levels, which could be lower degree wave I or a. The subsequent drop through $1767 was corrective wave ii or b. If correct, Gold should rally towards $1830-40 zone to terminate wave iii or c.

Gold price structure remains constructive for bulls as initial support around $1758 remains intact. Also note that the wave structure since $1721, might be unfolding as a potential combination w-x-y to complete the larger degree (a)-(b)-(c) corrective rally.

Gold is expected to remain in control of bulls I the near term as traders might remain inclined to initiate fresh long positions around $1770 mark. Risk remains just below $1758 while short term target potential remains through $1830.

Prepared by

Finacademy Technical Team