However, in this post, we will look at the recent rally in Gold and what the next few weeks has in store for the commodity through the perspective.
The H4 chart above allows us to put XAUUSD “Gold” entire progress since May 2019 into context.
It looks like a textbook five-wave impulse pattern is forming, labeled i-ii-iii-iv-v. Wave “iii” is the longest wave, and its sub-waves are also clearly visible. The present and the recent pullback, which seems to be unfolding as a fits in the position of wave iv. The missing piece of the puzzle is wave v. Considering that it’s not a truncation, the fifth wave is supposed to exceed the top of wave iii . In terms of price, wave v’s initial targets lie near $1460/Oz, but $1500 per ounce is quite reasonable as well.
Gold Bears Are Not Back Off Yet
On the other hand, gold traders should tread very carefully. According to theory, a three-wave retracement in the opposite direction follows every impulse. Therefore, we can prepare for a notable correction in wave (b) once wave iv and v complete the recent uptrend in wave (a).
If this count is correct, XAUUSD is still in an uptrend and aiming at a new high above wave iii’s top. However, a reversal within the blue box is highly probable and can open the door for a ~50% sell-off towards the support near $1350 an ounce.
What's your view on Gold?