The Break Higher of Gold Prices Opens the Door to 1200
With Gold prices breaking above $1170 per ounce, this elevates the Elliott Wave Theory wave 3 interpretation and lowers the probability of an immediate sell off. If this wave 3 outlook stays on track, Gold price would continue to rally higher towards $1245.
There is another wave picture that is a modified look of the zig-zag mentioned on October 2. That picture essentially calls for this move higher to be a wave 4 of a bearish ending diagonal. More commentary for both of these counts is towards the bottom of this article.
First Market Interpretation
Market Condition: Trend
Bias: Buy Gold
Entry: Near $1170
Stop Loss: $1157
First Target: $1195 where several wave relationships show up
Second Target: $1245 where wave iii is 1.618 times the length of wave i
Gold Price Outlook – Break Above 1170 Opens the Door to $1200
Created Using TradingView Chart
We’ve been highlighting and anticipating a powerful 3rd wave move higher in Gold since September 17. As you can see above, Gold is finally acting like it is in wave iii of v higher. If so, prices should get close to $1245 before finding meaningful resistance. The stop loss on this type of a play can be set at the former swing high of $1157.
Any good trader is going to consider the alternatives as it helps frame the risk. The alternative Elliott Wave picture we are watching is that this move higher is a W-X-Y double zig-zag (see the alternate labels on the chart). This pattern has tight wave relationships showing up near 1195-1198. This double zig-zag would then make up wave 4 of a larger bearish ending diagonal. Therefore, the behavior of Gold near 1195-1198 will indicate which pattern is higher probability.
As a result, we have the first target listed as 1195 which is a 1:1 risk to reward ratio compared to the entry.
If a break higher above $1200 develops, then we will likely visit $1245.
Retail sentiment supports further bullish momentum as retail traders are currency short to the tune of twice as many traders are short than who are long. SSI acts as a contrarian signal and suggests further gains are likely for Gold prices.
Gold Price Outlook is Favorable According to Elliott Wave Theory
To receive additional picks or articles on using Elliott Wave Theory, join Jeremy’s distribution list.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.