Gold is preparing to drop towards $1850/55

Gold is preparing to pull back towards $1814-15 mark, before reversing lower again. The yellow metal has dropped between $1834 and $1782 early this week and is looking for a partial retracement, to carve a lower degree wave b, before reversing lower again.

Gold had earlier dropped between $1916 and $1677 subdividing into 5 waves, carving an impulse. Ideally, an impulse is followed by a corrective wave in the opposite direction. The rally between $1677 and $1834 could be first wave of the corrective phase.

It has been marked as Wave A on the chart here around $1834 termination. If correct, the yellow metal is now carving potential Wave B towards $1750-60 levels going forward. Within the corrective Wave B, the metal is further producing a lower degree a-b-c wave structure.

Looking into the lower degree wave structure, the yellow metal has already terminated wave at around $1782 early this week. It is now looking to be underway to terminate wave b towards $1814-15, which is the fibonacci 0.618 retracement level of the above drop.

Traders might be preparing to initiate fresh short positions around $1814-15 mark, against $1834 and potential lower targets toward, $1750-60.

Prepared by

The Profinacademy.com Team