Gold Might Pullback Towards $1950/90

28 September 2020

Gold has confirmed that bears are in control and the long term trend might have turned lower after prices broke below $1862 lows over the last week. The yellow metal trades close to $1860 levels for now and might be preparing for a counter trend rally soon.

Gold short term wave structure since $2075 highs is as follows: The drop from $2075 towards $2015 could be marked as lower degree Wave 1. The subsequent rally towards $2050 as Wave 2 and the drop thereafter towards $1862 as Wave 3 respectively.

Gold remained sideways for an extended period after printing $1862 lows, and managed to produce a contracting triangle. The triangle terminated around $1975 levels, which could be potential Wave 4 as labelled on the chart here.

Finally, Wave 5 might have terminated around $1848 levels completing the impulse drop from $2075 mark. If the above structure holds well, we could witness a strong corrective wave towards $1950/90 levels under ideal conditions.

Also note that Wave 4 termination was seen towards $1975 and fibonacci 0.618 retracement is seen through $1990 levels respectively. High probability remains for a bearish resumption, if prices manage to reach there in the next few trading sessions.

Traders might be prepared to initiate fresh short positions around $1950/90 zone, with protective stop above $2075 and projected target below $1670 levels.

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