Gold has managed to get through $1900 hurdle with ease today early hours of trade. The yellow metal has print $1907 highs until now and might test $1920 zone, which is fibonacci 0.618 retracement of the entire drop between $2075 and $1676 levels respectively.
Gold is expected to face strong resistance if prices manage to reach $1920/21 zone going forward. A bearish reversal there would enable a turn lower and bears would be back in control. It might be a good strategy to wait for a reaction there before initiating positions again.
Alternately, a drop below $1872 from here would also confirm that bears are back and Gold has carved a lower top around $1907 levels. Also note that $1960 is a strong resistance and ideally prices should remain below that mark.
Looking at the wave structure since $2075 highs in August 2020; Gold has managed to carve a 3 wave drop. The entire drop between $2075 and $1676 could be Wave 1 of a proposed ending diagonal structure or it could be Wave A of an A-B-C correction.
If the above unfolds as an ending diagonal, Gold would be drifting below $1046 levels, which is December 2015 low in the next several weeks to come. On the other hand, if the metal produces an A-B-C decline, prices could still reach $1400 levels.
Either way, Gold is setting up for a drop towards $1400 levels at least. Hence it would be safer to look for opportunities to sell on rallies from here on. Traders might want to position themselves on the short side from $1907/15 levels.
Finacademy Technical Team
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.
EURUSD has carved a potential bottom at 1.1186 mark over the last week. EURO bulls have managed to stage a 150 pip rally thereafter, before pulling back.