Gold Update: Bulls Have The First Confirmation

Aibek Burabayev - Contributor - Metals

One month ago I dared to call my Gold update "Major reversal," but I have enough reason for that. Today I prepared a short term daily chart with the focus being on the first bullish move and its correction.

Chart courtesy of

Like a tree starting from a sprout, the new trend starts from the first counter trend move that has its threshold at the end of July. Gold's price has gained a weighty 9% (almost $100) in one month and has stalled at the $1170 level ahead of resistance. The gold market has been treading water within the 1077/1110 range for two weeks in a row and it looked like another consolidation was going to happen before the new drop down. But, surprisingly the price broke the upper bound and quickly cut through the $1100 level. It then had a small four-day break before it made the final jump to the $1170 level. This is the first serious counter trend move which I have labeled as the large green AB segment.

Nothing lasts forever and the first bullish move has been followed by a correction which consists of the two parts labeled by the small red dashed ab/cd segments. The red cd segment is almost equal (90%) to the red ab segment. The zigzag correction has been very deep beyond the common 61.8% retracement and has reached the $1098 level, just $2 ahead of 76.4% Fibonacci level. But the most important thing here is that it is a correction, not a trend, as the price couldn't reach the "root of the sprout" at the $1073 level.

After the correction, we can chart the projection of the next move up in the green large CD segment. I assume that the CD segment will be at least as long as the 1.618 of the AB segment (Fibonacci ratio). The target for the new segment is set at the $1254 level and it can bring a hefty sum of money once it reaches that level which has another $127 to go (from the current $1127).

The pleasant news for those who honors risk management, now new trough has been formed and the stop could be set just below that higher level ($1098) which is ahead of previous low for good $25. Current risk/reward ratio with entry at $1127, stop below $1098 and target at $1254 is 1:4.4 which is very good proportion. Once price will break through previous high at $1170 the Gold will rocket up to the target.

Intelligent trades!

Aibek Burabayev Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

5 thoughts on “Gold Update: Bulls Have The First Confirmation

  1. Holy mackerel, that is full of bad english, and bad labeling.
    In fibonacci labeling, the green 'A' should be at the top of the move where you show the 'B', etc. The green 'D' should be 'C'.
    Also the counter-trend (red) move would be a-b-c, not a-b-c-d. The red 'a' point would be at the *end* of the first wave down where you show the red 'b'.
    These basic 'errors' do not give me confidence in your overall predictions of higher prices, sadly.

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