Gold: Blue Sky Ahead?

Technicals | May 10 2023

Bottom Line 09/05/23

9/5:
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels:  $1950 / $1828 / $1750
Resistance Levels: $2077 / $2158 – $2193 (all-time high) (June 2023 contract)

All prices US$/oz Comex futures

Technical Discussion

Reasons to be bullish longer-term:
→ Multi-year triple three-corrective pattern looks to have finally completed back in November 2022
→ bullish decade-long cup and handle pattern now well evolved on the longer-term charts and in play
→ $1950 possible breakout retest for strength is now under watch

In our last review, we were keeping an eye on the micro rising wedge pattern, especially as these patterns are shorter-term bearish. We were anticipating price to break below this patterns lower boundaries and this is exactly what occurred in between reviews. As a general rule, these patterns when they do trigger generally retrace a minimum 50% of the pattern and quite frequently even head back to the beginning of the pattern.

Right at this juncture we’ve easily met the former target with price correcting back to $1980.00, with every attempt to break below here being met with buyers. At least to this point in time.

$1950.00 is key for me now. Firstly it is where the micro rising wedge pattern commenced from which as stated is a common zone for price to head back to when these patterns break out to the downside. Yet it is also where old resistance resides which means we could still witness a retest of this important line in the sand to prove that it has now reverted to support.

Price action is certainly happy trading above this area for now, and finding buyer support on any dips. So this is certainly a big positive backing our longer-term bullish aspirations on the metal.

From an Elliott Wave perspective, longer term we are looking for a 5-wave pattern to the upside to form from here, with our longer-term target still looking for $3000 USD if the price structures we are continuing to monitor remain robust. And if we have our positioning of the trend correct, then we are now in the very early stages of a Wave-3 (or C) evolving, with our expectations being that this wave will subdivide into a 5-wave pattern within itself as part of the process.

As mentioned in our video we do have some weak Type-A bearish divergence in play right here, yet for now due to its weaker status, we are defining it as inconsequential.

So in a nutshell even though the minor degree wave-(ii) now looks well evolved, it still may require a little more sideways to down before it fully completes. With any push above $2085.40 likely to see price run solidly up to the all-time high zone circa $2158-$2193. Blue Sky has been a very long time coming, yet we could be getting close. So long as $1950 continues to hold strong from here.

Trading Strategy

We remain long at $1739.00 and in between reviews, we have raised our stop to $1827 on the June contract. So finally locking in some better profits on the trade. Our aim is to continue to steer clear of the noise combined with raising our stop to even higher levels as soon as the next swing north triggers above $2085.40. The trade from a medium to longer-term perspective continues to look promising.

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