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Sideways Price Move Within Downtrend
Metals are not much in the news lately since they are not so attractive to investors because of quite unclear moves since 2015. Unclear price action normally means a trading range where price remains slow, choppy and overlapping within two trendlines, and this is exactly what is happening on gold since market turned up in 2015.
Based on old school technical analysis what we see is a triangle pattern which may get broken later this year. Remember, breakouts usually occur when least expected, as everyone gives up on previous failure set-ups in non-directional conditions. Now the question is in which direction will the price break? Well, normally I look back and see where the previous strong reaction came from since I think that smart money is still positioned for that move. What we see is very strong leg from 2011 highs. In Elliott Wave terms this is what we call an impulse; a five wave fall that indicates a bear market. So, this triangle that we are currently monitoring is most likely just a pause within still ongoing downtrend that can cause another five wave fall in the direction of a bigger trend, which is clearly to the downside.
Elliott Wave triangle is a five wave structure, labeled in A-B-C-D-E waves, so if you think that current leg down from 1360 is already underway to $1000, then take it easy, and don’t be surprised by wave E bounce as this one is still missing to complete the structure.
Bottom line, I think that Gold is in a correction that will take us below the $1000 mark before we may finally see long-term investors start looking for buying opportunities.