Elliott Wave Analysis: GOLD Trading In A Higher Degree Complex Correction
On the daily chart of gold we see a bullish pattern; a five waves up from November 2015 low followed by a turn down from $1,375 that we believe is going to be a corrective move because of overlaps. Based on latest price data we are tracking a double zigzag now that can be headed to $1,160 to $1,180 area where buyers will try to cause a turn. Technically speaking we see this market in bullish mode as long as 1046 is not taken out.
On the four-hour chart we see gold moving sharply lower, away from $1,337 swing high where market found a top of wave X that belongs to a big complex decline on a daily chart. So we are tracking a double zigzag which should see more weakness after black wave B bounce. As we see on the four-hour chart, the first wave A could be now finished as market unfolded five minor sub-waves within it, and as of today's price activity made an intra-day bounce higher, suggesting wave B could be in motion.
As we know the Elliott Wave theory suggests that after every five-wave development, a three-wave contra trend reaction will follow, so in our case we now expect a temporary three wave rise in black wave B, that will ideally find some resistance and a turning point lower around the previous wave 4 at $1,215 to $1,231.