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Gold rally tops out near $4204, technical outlook turns bearish
Action Forex said the $4204.6 pivot is decisive, and as long as it holds, rallies are expected to fail within three to seven swings.
Action Forex, citing a short term Elliott Wave view, said Gold (XAUUSD) rallied to $4204 to complete wave ((B)), after which the metal turned lower into wave ((C). The outlook frames wave ((C)) as a five wave sequence, with wave (1) ending at $3983.2 and subsequent movements unfolding through wave (2).
In that count, wave (2) formed an expanded flat, with wave A advancing to $4103.7, wave B pulling back to $3959.3, and wave C extending higher to $4166.07, completing wave (2) at a higher degree. From there, the analysis expects Gold to resume its decline in wave (3).
The piece added internal targets within the near term decline, noting wave ((i)) ended at $4099.03 and the corrective rally in wave ((ii)) concluded at $4141.05. It said the market is expected to extend two additional lows to complete wave ((v)) of 1, after which a rally in wave 2 would be expected to correct the decline from the July 22 high of wave (2).
Action Forex also pointed to a key inflection at $4204.6, saying that as long as the level holds, rallies are expected to fail within three or seven swings, reinforcing a downside bias in the short horizon.
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