Gold - Is Gold Prepared for a New Bearish Leg?
|The Gold price in its 2-hour chart shows a weekly opening with a bullish sentiment. However, the Elliott wave structure suggests that the yellow metal has completed the second segment of a bearish corrective sequence.
In terms of the Elliot Wave Analysis, after the highest level reached by Gold at $1,611.49 in early January 2020, the first decline looks like a wave "a" of Minute degree labeled in black, which ended at $1,536.01. The second upside should correspond to a wave "b" that advances as an ascending channel. The surpassing of the upper-line makes us foresee the current move could end soon and give way to a bearish wave "c."
On the other hand, during the current week opening, institutional traders are taking advantage of the bad news driven by the coronavirus to move up to reduce their positioning in the long-side, which in the latest CFTC report reached 86.78%.
A short position will activate if the price breaks below $1,571.72 per ounce. Our conservative scenario establishes a potential first profit target at $1,552.48. If the price action extends its drops, the yellow metal could fall until $1,538.01, and even $1,517.86 per ounce.
The level that will invalidate our bearish scenario is placed at $1,596.17 per ounce.
Trading Plan Summary
Entry Level: $1,571.72.
Protective Stop: $1,596.17.
1st Profit Target: $1,552.48.
2nd Profit Target: $1,538.01.
3rd Profit Target: $1,517.86
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