Gold need to stay below $1780, and break the immediate support around $1670 to confirm a bearish reversal. It is nobody’s guess when it is going to happen but with respect to the probabilities, it is good to prepare to sell on rallies from here, rather than buying the dip.
Larger degree wave structure is telling a clear story. Gold has been in a corrective phase since $1920 highs in 2011. The first major corrective wave had dropped to $1046 levels in December 2015 and it had clearly sub divided into 5 waves.
This was an impulse wave, labelled as Wave (A) on the chart here. Please note, an impulse wave confirms that the corrective phase is going to take shape of a potential zigzag and the last wave will also most likely sub divide into 5 wave pushing below $1046 to complete the pattern.
Intermediary Wave (B) might be complete at $1780 or still in progress. We shall come to know soon if Wave (B) has terminated. Either way, Gold is setting up for a Wave (C) drop towards $1046 levels and beyond. Further Wave (C) should also sub divide into 5 waves, could be an impulse or a diagonal.
Looking at the short term wave structure, immediate support is seen at $1670 and Gold need to break below that mark to confirm a meaningful top in place. Conservative traders might want to remain flat for now and wait for price action to print below $1670.
Aggressive traders might remain on the short side with risk above $1780. If prices break the $1780 mark, look to sell again at a higher level. The yellow metal remains a great candidate to be sold on rallies from here on.
Aggressive Short against $1787/90, targeting below $1046 in the long term.
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