Two scenarios for Gold: Elliott Wave analysis suggests bullish and bearish potentials

Gold continues to trade within a well-defined descending channel, and the current price action has provided compelling structural patterns that align with Elliott Wave Theory. Traders and analysts are watching closely as the market presents two possible scenarios — both rich with opportunity but offering different short-term expectations. Below is a detailed breakdown of the primary and alternative Elliott Wave counts for XAU/USD.

Primary count: Double zigzag completed, impulse formation begins

In this primary scenario, we are working under the assumption that the WXY double zigzag correction has completed. The corrective wave (Y) appears to have bottomed out, completing its C-leg near the lower boundary of the descending channel.

Following this, we can observe a clean impulsive wave count beginning to emerge:

• Wave (1) initiated from the bottom of (Y), followed by a corrective (2).
• Then, a clear five-wave subdivision can be seen marking Wave 1.
• A corrective Wave 2 seems to be unfolding now, retracing from the channel’s upper bound.

This structure suggests a nested 1-2, 1-2 sequence, which often precedes a strong third wave — typically the most powerful and extended wave in Elliott Wave theory.

Key implications

• Bullish potential is high if Wave 2 holds above the low of Wave (2).
• A break above the channel would validate this count and confirm the beginning of a much larger impulse.

Alternative count: Double zigzag incomplete, one more leg down

In the alternative scenario, we view the market as still being within the final stages of a larger WXY double zigzag correction. Here, the second zigzag, labeled as Wave (Y), is yet to complete its final C-leg.

According to this count:

• Wave A and B of (Y) are completed.
• Wave C is currently developing, possibly forming a five-wave move downwards.
• Price is rejecting the channel’s upper trendline, suggesting limited bullish momentum for now.

This scenario forecasts a short-term bearish continuation before gold can find a solid bottom. The projected target for Wave C could be closer to the lower boundary of the channel, likely between $3,080 and $3,040, aligning with previous demand zones.

Key implications

• Bears may dominate temporarily.
• Completion of Wave C would conclude the double zigzag, creating a launchpad for a significant bullish reversal afterward.Summary

Gold is at a crucial inflection point. Whether the impulsive structure continues from here (Primary Count) or the market is setting up for a final decline (Alternative Count), traders should prepare for significant movement in the coming sessions. Monitoring price behavior around key trendlines and Fibonacci retracement levels will be vital to confirming which Elliott Wave count is unfolding.

Stay tuned and remain flexible — the market will soon reveal its hand.