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.
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.