Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.

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Gold's Corrective Wave Count to Complete at Fibonacci Cluster (2/15)

Gold (XAU/USD)

- We mentioned yesterday that we are in a corrective rally in gold, but the structure is not clear, and a bullish wave count is valid as well.
- The momentum is bullish in the 1H chart where the RSI shows a bearish divergence, and the price action has flattened out, but another bullish attempt is pending as the RSI remains above 50, reflecting strength in the near-term.
- The 4H RSI shows the market is a rising wedge, or it could be a channel if price action accelerates.
- In the larger perspective, we are in a ranging market (after a bull market), so now that gold has returned to 61.8%, and 78.6% retracement of recent declines, we should expect some resistance soon.
- The the current resistance pushes a decline below 1350, we are looking at a decline towards 1309. However, if the market is strong, it should stay above the 1360 area, middle of the most recent consolidation zone, while pushing to higher pivots.
- A bullish scenario would be a rally towards the 1394 area, which could be followed by a correction decline back tow test the 1350 area.
- The 1H chart shows a pattern breakout target of 1395, and the 4H chart shows a pivot at the 1394 area, so this will the target for the rally, and a place where the market see resistance.
- This bullish outlook requires at least a  close in the 1H chart above 1378.
- Otherwise, we could be heading back down to test  the 1350 area.  Yes, very unclear bias since we are in the middle of a range.

Has Gold returned to the bulls, or is the consolidation period going to extend longer? We would love to hear what you think.

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Fan Yang CMT
Chief Technical Strategist