Technical Outlook:

Gold continues to trade in a tight range between $1700 and $1745 since last several trading sessions. The yellow metal is prone to further losses as long as prices stay below $1765 resistance. Only a break below $1660 would confirm with respect to price action, that Gold prices have reversed.

Structurally, the yellow metal has been in a corrective phase at a larger degree, and hence we continue to present the weekly chart setup here. After completing an impulse rally between $250 and $1920, Gold has been in a zigzag corrective phase.

The drop from $1920 through $1046 had sub divided into 5 waves, Wave (A) on the chart here. The subsequent rally has been in 3 waves and unfolded as a combination W-X-Y. It took 4 year for Wave (A) while 5 years for Wave (B) to potentially terminate around $1765.

If the above structure and wave counts are correct, Gold should proceed lower towards $1046 as Wave (C) unfolds. A zigzag corrective wave is also known as a 5-3-5 structure. To complete the structure, Gold needs to drop another 5 waves lower below $1046. This is the bigger picture for long term wave structure.

In the short term, Gold seems to have carved a leading diagonal from $1765 highs, potential lower degree Wave 1 (not labelled here). Wave 2 might be complete as a flat correction towards $1745 last week. High probability remains that Wave 3 is unfolding. If the above short term counts hold, Gold should sty below $1745 and push lower towards $1660 at least.

Once $1660 support is broken, it could be confirmed that the long term trend has turned bearish and Gold is good to be sold on rallies thereafter.


Trading Strategy:

Aggressively short against $1765, target is below $1046.


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