Is gold set for a ‘sympathy bounce’ towards 1900?
Updated
It was a tough end to the week for gold bugs which saw the yellow metal plunge 5% from its YTD high. Yet support was found just above the 50-day EMA, and two inverted hammers (with slight bullish closes) show that bearish momentum is waning.
To my eyes it looks as though gold is ready to drift higher as part of a countertrend move against its NFP losses. Yet I am not yet convinced that this is the low of the bearish cycle.
Gold rallied an impressive 21% since its November low with little in the way of a pullback, and this bad spell could be an A-wave of an ABC correction (and potentially now drifting higher as part of a B-wave). And what could help lift if further is the fact the Jerome Powell was not as hawkish as expected, given the strength of the employment report. And that could allow for the USD to pull back and gold rise, as we approach key inflation data next week.
For now, I think it’s headed for $1900 (or there about), where I’d expect it to cap as resistance. At which stage we can assess its potential for a swing high and next leg lower, as part of a C-wave. Also note that the monthly and weekly pivot points reside around $1900
Interestingly, 100% projection of the initial move lower, from a $1900 pullback, sits around $1800 – just beneath the August high. SO that could provide a decent reward to risk ratio for bears if gold tops out around $1900.
To my eyes it looks as though gold is ready to drift higher as part of a countertrend move against its NFP losses. Yet I am not yet convinced that this is the low of the bearish cycle.
Gold rallied an impressive 21% since its November low with little in the way of a pullback, and this bad spell could be an A-wave of an ABC correction (and potentially now drifting higher as part of a B-wave). And what could help lift if further is the fact the Jerome Powell was not as hawkish as expected, given the strength of the employment report. And that could allow for the USD to pull back and gold rise, as we approach key inflation data next week.
For now, I think it’s headed for $1900 (or there about), where I’d expect it to cap as resistance. At which stage we can assess its potential for a swing high and next leg lower, as part of a C-wave. Also note that the monthly and weekly pivot points reside around $1900
Interestingly, 100% projection of the initial move lower, from a $1900 pullback, sits around $1800 – just beneath the August high. SO that could provide a decent reward to risk ratio for bears if gold tops out around $1900.
Note
Gold didn't quite pull back to $1900 - it stopped $9 shy of the key resistance level. But prices promptly reversed as US yields the the dollar moved higher, to see gold close with a bearish engulfing / outside day. I suspect the corrective high is now in place and that gold is to now try and break lower. A break beneath the 50-day EMA also breaks 1857.87 support and assumes bearish continuation.
The lower corrective high of 1890.21 lowers the 100% projection (wave equality) to $1791, so $1800 remains the final target, although $1850 and $1828 could be interim targets along the way.
Note
Super happy with how this one has played out so far - although 1800 target is yet to be reached.For a lower-timeframe idea to accompany this daily chart, check out:
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