Gold, in its hourly chart, reveals the bounce that the precious metal develops since January 14th. The mid-term structure suggests the possibility of a descending wedge in progress.
In terms of the Elliott wave analysis, the yellow metal likely makes a new bearish leg in this formation, which could allow the incorporation of fresh traders expecting to activate their limit long positions.
On the other hand, in the latest CFTC report, institutional traders reported that they hold 86.24% of their positioning in the long side. This participation makes us suspect that the latest declines observed correspond to a taking profit activity. Nevertheless, the main bias continues being bullish.
Due to our expectations of a new decline, a potential long entry will activate if the price retraces, and, then, it experiences a bounce that closes above $1,546.59 per ounce. Our conservative scenario anticipates a likely first target at $1,555.36 per ounce. If Gold continues its advance, market movers could drive Gold to $1,566.46 and even possibly till $1,576.82 per ounce.
The bullish scenario will be invalid if the price drops and closes below $1,535.95 per ounce.
Trading Plan Summary
Entry Level: $1,546.59.
Protective Stop: $1,535.95.
1st Profit Target: $1,555.36.
2nd Profit Target: $1,566.46.
3rd Profit Target: $1,576.82.
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