Gold is falling again after being resisted at 1297. From late February, it has been on a up and down move within a boundary and exhibiting an Elliott wave pattern that suggests price will move up soon. Will there be a break above 1297 resistance if this pattern complete?. The following is based on 21 June Gold Elliott wave analysis.
21 June, AtoZForex - We have always discussed about the efficacy of Elliott wave theory in predicting market moves. Recognizing Elliott wave patterns in a price chart has been used by many professional traders in any markets and across all time frames for about a century. Many of these patterns have also been shared here and we could see the huge moves that followed a high percentage of them. This theory is really helpful to help bother less about what the 'News' are saying. Everything is in the price chart and are revealed in patterns.
Price charts exhibit patterns that depict mass behavior and psychology of market participants. It's a mirror that shows where the real money is going. The patterns fail some times- nothing is perfect- but the predictive power gives clues to 'HUGE MOVES'. This shows that the intention of the real forces that drive the market is well predictable without reading the news. It's actually beyond prediction, it's a phenomenon.
Elliott wave theory discussed 5 core patterns - Impulse wave, Diagonals, Triangles, Flats and Zigzags. Each of these has its own characteristics and 'before' and 'after' behaviors. The Triangle has three varieties - contracting (most common), expanding and barrier triangle with distinct identities. What is emerging on Gold since the completion of an impulse wave (at 1264) in late February is a barrier triangle. The chart below shows more.
21 June Gold Elliott wave analysis: barrier triangle?
Gold Elliott wave analysis, H12 (click to zoom)
Barrier triangle are known to have flat (b)-(d) trendline and price is expected to break above the b-d line to continue the prevailing trend (upside in this case). The (a)-(c) line provides a support for wave (e) which could be hit or not. The chart below shows the sub-waves of the (a)-(e) waves.
Gold Elliott wave analysis, H4 (click to zoom)
Each sub-waves of the triangle has a-b-c internal waves which is what is expected in a triangle. Wave (e) is expected to be supported at 1232. A strong bridge below 1232 toward 1213 will invalidate this setup. If price stays above 1232 and makes a good breakout above 1250, there is an early sign of a bullish move. The rally, if genuine, should break above 1297 and most probably be an impulse wave. This could propel more than 1500 Pips in a renewed bullish journey.
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