Gold bullish reversal?

Zorrays Junaid Alchemy Markets

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.

Author

Zorrays Junaid

Alchemy Markets

Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold weakens further below $4,050; looks to US NFP for fresh impetus

Gold extends the previous day's retracement slide from a two-week high, weakening further below $4,050 during Friday’s Asian session amid modest US Dollar strength. The USD Index builds on its recovery from the lowest level since late September, and is seen weighing on the commodity. The downside, however, seems limited as traders await the release of the closely watched US monthly employment details before placing aggressive directional bets.

Zcash defies crypto market sell-off as NU7 upgrade fuels breakout hopes

Zcash (ZEC) shows resilience above $1,300 on Friday, defying the broader cryptocurrency market sell-off, which saw over $1 billion in liquidations the previous day. This strength aligns with Network Upgrade 7 (NU7), scheduled for Friday, which enables faster payments and disables older transaction pools.

Neither the election nor the US Dollar: Why Friday's payrolls hold the key to Gold's next move

Gold has climbed back above $4,000 as the US Dollar weakened following a Democratic sweep in the US midterm elections. However, with every Gold rally facing heavy selling throughout the year, investors are looking to Friday's Nonfarm Payrolls report to determine whether this move marks a sustainable breakout or just another temporary rebound.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.