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
Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
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