Executive summary
- Trend bias: Gold (XAUUSD) appears to be nearing the ending stages of wave c of (ii) lower.
- Support zone cluster: 4,377 – 4,401 to finalize the correction lower.
- Bias is turning bullish as price has reached the support cluster and while gold price holds above $4,099.
Gold has been correcting lower since a near-term top developed on April 17. We previously forecasted this decline could reach as low as 4,377 and gold prices are nearing this low. The patterns suggest a bottom may develop nearby leading to a strong rally.
Current Elliott Wave analysis
The current Elliott wave count for gold shows the yellow metal is in wave ((5)) of c of (ii), a corrective dip.
This wave (ii) is correcting the rally from March to April. We anticipate that it will be a partial retracement, holding above 4,099. The decline appears to be nearing its terminal point as the wave count is mature and in an ending wave at multiple degrees of trend.
It is possible that the low reached just a few hours ago at 4,401 may be the final low of wave (ii). If not, there are several support levels and wave relationships appearing near 4,400 down to 4,377.
Round number support at 4,400.
Wave c is the 100% Fibonacci extension of wave a at 4,393.
The 61.8% Fibonacci retracement level of wave (i) is near 4,385. This is a common wave relationship between two adjacent waves.
Also, hovering near this same price zone at 4,377 is the 200 daysimple moving average based on the daily price chart.
Therefore, if gold is successful in falling to near 4,377, I suspect strong support will develop leading to a bounce and possibly a kickoff to wave (iii) higher.
Bottom line
Gold appears to be declining in wave ((5)) of c of (ii), a larger bearish zigzag pattern. The pattern is mature and is nearing its end, possibly in the 4,377 – 4,401 price zone.
If this is correct, then gold would rally from that bullish reversal zone to retest all-time highs. In the unexpected event of gold prices pushing below 4,099, then we’ll need to adopt an alternate wave count.