A review of the US Dollar (DXY Index) before we move on to the yellow metal (DXY and Gold have an inverse relationship).
Although we are approaching the previous swing high at 104.10, there is no clear indication of a change of trend. The weekly chart highlights all last week's initial losses being recaptured. The intraday chart highlights a 261.8% extension level located at 104.86. Elliott Wave analysis would suggest we are now moving higher within the 5th wave.
Gold – I am expecting mixed of volatile trading as we move lower in a corrective formation. The most important fact behind this analysis is the bespoke support levels at $1,892 and $1,890. With these levels being close to the 88.6% pullback of $1893, this is our prime medium-term support.
We have a demand zone between $1,915 and $1,914. With $1,915 being the projected confluence support of a Bat formation, we look to this level as the first substantial downside barrier.
Conclusion: although the immediate bias is bearish, a move to the $1,915-1,914 zone will offer a buying opportunity. Using correlation, it is likely that the DXY will reach the 261.8% extension level at the same time.
Resistance: $1,945 (PoC), $1,953 (swing high) $1,988 (strong high)
Support: $1,915-1,914 (demand zone/confluence), $1,894-1,893 (demand zone), $1,893-91 (bespoke)
PoC (Point of Control) Open – $1,923 (August 29)
Although we are approaching the previous swing high at 104.10, there is no clear indication of a change of trend. The weekly chart highlights all last week's initial losses being recaptured. The intraday chart highlights a 261.8% extension level located at 104.86. Elliott Wave analysis would suggest we are now moving higher within the 5th wave.
Gold – I am expecting mixed of volatile trading as we move lower in a corrective formation. The most important fact behind this analysis is the bespoke support levels at $1,892 and $1,890. With these levels being close to the 88.6% pullback of $1893, this is our prime medium-term support.
We have a demand zone between $1,915 and $1,914. With $1,915 being the projected confluence support of a Bat formation, we look to this level as the first substantial downside barrier.
Conclusion: although the immediate bias is bearish, a move to the $1,915-1,914 zone will offer a buying opportunity. Using correlation, it is likely that the DXY will reach the 261.8% extension level at the same time.
Resistance: $1,945 (PoC), $1,953 (swing high) $1,988 (strong high)
Support: $1,915-1,914 (demand zone/confluence), $1,894-1,893 (demand zone), $1,893-91 (bespoke)
PoC (Point of Control) Open – $1,923 (August 29)