Executive Summary
- Gold appears to have completed a 5th wave as wave relationships appear near $2800
- A decline to $2600-2650 appears higher probability
- The price behaviour near $2600 will provide clues to the next big trend
Gold Reached the End of 5th Wave
Gold has reversed nearly 2% today (at the time of this writing). This is the largest single day decline since the summer (June or July depending on how today’s candle closes).
If the week closes near current prices or lower, it would represent a bearish weekly pattern like a shooting star or bearish pin bar.
From an Elliott wave perspective, it appears a fifth wave has been finalized. The big question is what degree of trend was this wave 5?
Let’s look at a couple of wave counts we’re following.
Chart 1
This first wave count suggests a larger trend has terminated going back to November 2023. As a result of this large trend, it has the potential for a larger downward correction. A ‘normal’ retracement would be back near $2400 and possibly lower levels.
The $2400 price range contains wave ii of (v) which is a normal retracement within an extended fifth wave. Additionally, the previous wave (iv) symmetrical triangle is near this price zone too.
Chart 2
The second wave count we have our eye on is above.
This suggests the high was a smaller degree of trend fifth wave. Therefore, the pullback will be smaller.
Under this model, a decline to $2600-$2650 would be considered normal. This level contains the 38.2% Fibonacci retracement of micro wave 3. Additionally the previous 4th wave is nearby.
After this brief decline in micro wave 4, then micro wave 5 would rally up to new all-time highs.
Bottom Line
Both of these wave counts are calling for a decline to $2600-$2650. From there, the two Elliott wave models shared above diverge with the first one calling for additional declines to $2400 while the latter calls for a rally to new highs above $2800.
Keep an eye on the upward sloping blue trend line. A break below the blue support level would signal that a top has formed and that Gold may want to visit lower price levels.
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