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Gold Prices Advance in Preparation for $1296 Retest

Gold Prices Advance in Preparation for $1296 Retest

Jeremy Wagner, CEWA-M, Head of Education


The tension rising in the Korean peninsula has traders bidding up gold prices. We have been maintaining for three months now how our models were showing the gold price pattern was incomplete to the upside on an eventual break above $1300. As gold trades at $1275, will this current rise hold enough energy to break higher?

We can’t say for sure if the current trend is going to break higher, but the patterns are longer term bullish. It appears gold prices are consolidating in a sideways triangle. If this pattern holds, then gold would need to hold below $1296 and continue sideways. It does appear as though we are nearing the end of the triangle pattern. Therefore, if we do get another dip into the $1215-$1245 zone, that dip may be the final wave of the triangle offering bullish traders an opportunity.

To learn more about trading Elliott Wave triangle, view this hour long webinar recording solely covering the triangle pattern with a free registration. Don’t have time for the video recording, grab your beginner and advanced Elliott Wave guides here.

If we do get an immediate break above $1296, that would imply that the ‘B’ wave ended in early July as a flat pattern and the ‘C’ wave at one larger degree is working itself higher towards $1345.

The IG Client sentiment reading for gold is at +2.09. The number of traders net long gold have decreased since the beginning of July. This could be a subtle clue for bullish traders as the sentiment reading has been dropping from even more extreme levels. Follow live trader positioning in gold.

$1204 is a key level and our models show this is a lower probability move. A break below $1204 would cause us to reconsider the bigger picture pattern and we would turn neutral the yellow metal.

Bottom line, we are anticipating gold prices to find continue to be supported on an eventual break above the $1296 ceiling.

This is a shorter term outlook for gold. Read our quarterly gold price forecast to see what may be influencing the longer term cycles.

---Written by Jeremy Wagner, CEWA-M

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

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Crude oil prices stuck in a sideways triangle consolidation.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.