Short

Updated

GOLD — Wave 4 Correction

Gold is entering a danger zone now, the fifth subwave of the third wave that started one year ago is about to end soon. Also approaching a macro trend line resistance.

Here's a macro view so that it's clear where do all the lines come from:

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Looking closer, it can be something like this:

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Going one level deeper to 1h time frame. And wave (v) can be visually subdivided further into five waves of even smaller degree and it's currently in the fifth wave itself. A short term correction to 2500 area is likely to start soon.

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30 minute chart. I'm not trading on such small time frames but will be interesting to see if the theory works in practice here.

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Actually gonna try it.

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This is quite an aggressive trade, but looks good for now. The yellow line marks my entry point. Target is at 2530. Note that it's going to be only a Minute degree wave ((iv)).

After that we can expect one more wave up, and only then once the Minor degree wave 5 is completed we should see the Intermediate wave (4) correction discussed at the start of this thread (I changed my wave colors slightly so don't be confused).

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Wave count was incorrect on small time frames so not a perfect entry.

Here's an updated wave count. Counting with such precision is not necessary but it can be a fun exercise:

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Expecting something like this currently:

Remember, this all happens inside the wave ((iii)) and after wave ((iv)) we can expect one more wave up before a bigger correction:

Since we have already reached the trend line we can expect wave (3) to continue to the 1.618 extension (see my macro chart in the initial idea description). Wave (5) should then go higher:

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8h chart. Shooting star candle, RSI overbought, Stochastic RSI crosses down.

Gold Futures, 2h. Highest volume in days on a bearish candle:

Order cancelled

This little correction can continue for some more time, but it's a flat type correction and not likely to go much lower, doesn't look like it's worth the risk anymore. Will wait for a higher degree opportunity.

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Intermediate wave (3) is now at 1.618 extension of wave (1) measured from the bottom of wave (2). At the same time, the length of Minor wave 5 is currently 0.618 * waves 1-3. This all coincides with the higher timeframe 1.618 fib, the trendline that connects 1980 and 2011 tops, and the top of the blue channel of the smaller degree trend.

In addition to that, monthly RSI and Stochastic RSI are at extremely high levels. Same on the weekly.

This is a high probability reversal zone for gold.

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The weekly candle closed as a bearish pin bar. The correction is likely to start now.

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The correction has begun.

Approximate targets:
* 2430 (top of subwave 3)
* 2365 (0.38 retracement)
* 2290 (bottom of subwave 4)

function_mechanic

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