Daily view: Last week’s daily action reveals that price once again tested daily support at 1178.3 on Thursday, which as you can see, saw very little follow-through buying interest on Friday. This support has held firm on four occasions now, yet each time, including the most recent, no higher high formed, which in itself could suggest buying weakness. A close below this daily barrier would not be the end of the world for the buyers mind you, since daily demand at 1159.4-1170.8 (located just within the aforementioned weekly demand area) is lurking just below to save the day.
4hr view: Take a quick look back at the AUD/USD and USD/JPY 4hr charts; the correlation to Gold’s recent price movement is near 100% at the moment! The only difference between these two pairs and Gold is there are two possible patterns forming on Gold at the moment, each with near-perfect symmetry. One has been colored in green – the , and the other in black – the formation. The reversal zones which are shaded in yellow ( zone 1207.6/1201.7, zone 1172.7/1176.5) both comprise of a clear and distinct of X-A, an pattern and a of A-B.
We’re sure most would agree, with the right confirmation signal seen within either of these 4hr reversal zones, there is a very good chance a reversal will take place. However, which one do we think will see action first? Remember, there can only be one if we keep to the correct alignments of this pattern. Well, with the suggesting weakness is forming in the market at the moment (see above); we’re favoring a move lower to attack the Gartley’s reversal zone first. In addition to this, we’re also seeing consumed demand just below the closing price 1188.4. Check out the clear demand consumption tails seen marked with a red at 1184.2/1181.5. These tails were likely sent south to fill unfilled buy orders to continue rallying higher, thus with little buy orders left here, price should theoretically be free to drop down to test the 4hr demand area at 1177.6-1178.6. At this point, you may be thinking, but price has still not reached the reversal zone. And you would be right; this is a potential obstacle, but not a strong one. See how price has already attacked this 4hr demand area once already on the 1st of May at 1170.3, this has very likely weakened the buyers here and considering the overall size of this area, we will likely see a fakeout next time it’s visited. A fakeout into where???? Right into our reversal zone!
Levels to watch/live orders:
• Buys: 1172.7/1176.5 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sells: Flat (Predicative stop-loss orders seen at: N/A).