XAUUSD Wave 5 Completed, Entering an ABC Correction Cycle

XAUUSD – Wave 5 Completed, Entering an ABC Correction Phase
Weekly Plan Summary

Gold has completed Wave 5 with a very strong impulsive rally and is now entering an ABC corrective phase to complete the Elliott Wave structure.
For the coming week, the primary strategy is to SELL at the Fibonacci resistance zone 4316–4320, then look for BUY reactions at the major liquidity area around 4215.

1) Elliott Wave – Why the Market Is Likely Entering an ABC Phase

The recent rally shows clear end-of-Wave-5 characteristics: strong momentum, long bullish candles, followed by a sharp downside reaction (profit-taking and liquidity withdrawal).

Once Wave 5 is completed, the market typically moves into an ABC correction to rebalance supply and demand and complete a full Elliott cycle.

ABC Structure Based on the Chart Provided

A-leg: Price drops into the 4259–4262 area (first reaction zone of the correction).

B-leg: Price retraces back towards 4316–4320 (the Fibonacci SELL zone on the chart).

C-leg: Price continues lower towards 4215 (POC + major liquidity cluster formed late last week) — this is the primary target of the correction.

2) Key Price Levels

Sell Zone (B-leg): 4316 – 4320 (Fibonacci resistance)

Near Support (A-leg reaction): 4259 – 4262

Mid Support: 4238 – 4241

Main Target / Liquidity Area: 4215 (POC + major liquidity cluster)

Scenario Invalidation Level: 4191
If price breaks below this level, the structure will need to be reassessed.

3) Trading Scenarios for the Coming Week
Scenario 1 (Preferred): SELL at the End of the B-leg

Sell: 4316 – 4320

SL: 4326 (clear break above the sell zone)

TP1: 4262

TP2: 4240

TP3: 4215

Logic:
The B-leg is typically just a corrective pullback within the broader ABC structure. Selling at the Fibonacci resistance offers a far better risk-to-reward profile than chasing shorts mid-range.

Scenario 2: BUY Reaction at the End of the C-leg

Buy: Around 4215 (preferably with a clear reaction)

SL: 4191

TP1: 4240

TP2: 4262

TP3: 4290 – 4310 (if structure reverses and the uptrend resumes)

Logic:
4215 is both the POC and a major liquidity zone, often acting as a “magnet” to complete the C-leg before a new market cycle begins.

Alternative Scenario: If Price Breaks and Holds Above 4320

If price breaks above 4320 and closes clearly on H1 above this level, the ABC correction may be delayed, and gold could extend higher into the next resistance zone.

In this case:

Do not stubbornly hold SELL positions.

Shift bias to waiting for pullbacks to BUY in line with the trend.

4) Fundamental Context – Volatility Likely to Increase, Supporting a Correction Phase

Philadelphia Fed President Anna Paulson noted that rate cuts have “removed some of the insurance” against risks in the labour market.

She also highlighted that while the labour market is under pressure, it has not yet broken. This reinforces a cautious Fed stance, a backdrop in which gold often experiences sharp liquidity sweeps before aligning with its technical structure.