Gold price broke below the apex of a running triangle yesterday. The bearish move triggered a higher USD reaction across the board – albeit it was quickly reversed.
However, gold continued its downside and now eyes the measured move of the reversal triangle that formed above the $2,000 level. If gold leads, expect the USD to follow sooner rather than later.
Gold Price Breaks Below the Apex
The technical perspective on gold here is more than interesting. The move to an all-time high followed a breakout of a running triangle. Such triangles typically form at the end of complex corrections. One place for such complex corrections to form is the fourth wave of an impulsive move.
According to the Elliott Waves Theory, the fifth wave is just an excuse to start selling after a bullish impulsive structure. So does gold price action suggest – a fifth wave completed on the move to the $2,000 level, and now the market corrects.
The measured move of that triangle (i.e., the brown line on the chart below) points to $1,720 before anything. Therefore, bears may want to stay short with a stop at the previous lower high. By doing so, the risk-reward ratio exceeds the minimum requirement of 1:2.
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Gold Price Forecast
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