Gold (XAUUSD): Bearish Signals Hint at Possible Drop to $1000!

Upon examining the monthly gold chart, it appears there could be a significant price drop, a secondary scenario in our analysis. We don't foresee a 50% decrease in the near future, though it's not impossible, especially if the market downturn affects all sectors, including gold. It's crucial to consider all possibilities due to market unpredictability, even a drop to $1000 per ounce.

This view is backed by a bearish RSI divergence since 1966 and signs that we might be completing the first 5-wave cycle, which could reach up to $3000 per ounce but should not exceed this level.

Currently, the apparent breakout seems to be a fake-out. Surpassing $3000 would mean our analysis underestimates the bullish potential.

Elliott Wave Theory suggests Wave 5 might break out from the trendline formed by Waves 1 and 3, create a fake-out, then sharply decline, aligning with our secondary scenario for gold. We plan to further explore and outline our primary scenario in the next section.

Anyway, when closely examining the 12-hour gold chart, we primarly anticipate a continued upward movement rather than a sharp downturn. We believe that the minor Wave 1 has concluded, and we should see a retracement to the 50-61.8% Fibonacci level, where we expect to find support at the High-Volume Node.

The recent upward trend has been quite extreme. Therefore, we predict finding support between $2,200 and $2,130, before potentially breaking through the $2,500 mark, which we expect to coincide with the completion of the major Wave (3) or minor Wave 3.

Comment:

One of our members has pointed out the significant sell-off in gold. We are maintaining our limit order at approximately $2,208, which corresponds to the 50% retracement level. Currently, gold is in a consolidation phase near what might be the top of Wave 1.

We had a strong upward movement followed by a sideways phase, typical of consolidation before a breakout in either direction. Given the recent strong rise, we anticipate a downward breakout to address the current imbalances, especially since gold is near its all-time high. Unlike a stock like Nvidia, gold's behavior suggests a likely pullback before any further ascent. It's crucial that gold does not fall below the $2,150 level, as this could lead to a rapid decline to $2,000. We expect to see a rise in the gold price this week, followed by a sell-off towards our limit order around $2,208.