Gold Technical Update
Gold has been trading higher since the start of this year after finding support at 1522.60 to end 2011. The 4H chart shows the RSI reading holding above 40, and mostly above 50, while being able to hit 70. However, the last 3 peaks create a bearish divergence with the 3 corresponding peaks in price. Also, the market appears to be contained in a rising wedge. It could possibly be an ending or diagonal triangle, and according to a conventional Elliott Wave count, the 5 waves are there. This satisfies an ABC correction wave count as well.
Confirmation would be price action breaking below 1640. Next, the RSI reading falling below 40 would confirm loss of bullish momentum. If price action can further confirm with a pullback that respects the 200 4H simple moving average as resistance, we are opening up the 1578.90 (61.8% retracement) level as the first target.
Looking at the daily chart, we see a possible formation of a descending triangle. Also note that the RSI is nearing 60, below which the market still reflects maintenance of the bearish momentum. Additionally, respect of the declining triangle resistance and a push below 61.8% of the latest upswing, should open up the triangle support right under 1530. This would satisfy an (A)(B)(C)(D)(E) corrective triangle structure.
This Elliott Wave scenario is valid until a break above the projected descending triangle, which is near 1680 at the moment. A sustained break of the RSI reading above 60 on the day chart would also confirm an upside price breakout to open up higher pivots starting 1750 and 1800. Still this could be part of a continuing consolidation, that is just not in congestion, but in a flat-sideways manner.