(MENAFN- DailyFX) Gold prices appear to be grinding sideways in an Elliott Wave triangle. Currently, the range boundary on gold prices are locked between $1214 and $1295.
According to the Elliott Wave model we are following, we previously identified the potential for a jump up to $1260. Now that we have arrived, what is next for gold prices?
The model continues to allow one more bump higher towards $1280. Though we are not certain of the odds of that happening, the higher probability opportunity is buying at lower levels. Eventually, we are anticipating prices to dip back towards $1230-$1240 before accelerating higher.
As you can see above, it appears we are in the latter stages of the ‘d' leg of the Elliott Wave triangle. That implies another shallow dip in the ‘e' wave to finalize the triangle pattern. For the pattern to remain valid as pictured above, prices will need to hold above $1214. Using wave relationships, gold prices may dip back to $1230-$1240.
The IG Client sentiment reading for gold is at +3.22, which is quite a bit lower than during our previous report. The amount of traders net long has been decreasing. We use sentiment as a contrarian indicator that suggests there may be another high coming in gold. Follow this live reading and learn how to trade with sentiment at this link.
Though an immediate break above $1295 cannot be ruled out since the larger trend is incomplete, we think gold prices continue to chop sideways to finalize the triangle pattern first.
This is a shorter term outlook for gold. Read our Q2 gold price forecast to see what is expected through the end of June.
---Written by Jeremy Wagner, CEWA-M
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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