GOLD is looking bullish, however on the daily chart we see price in final stages of a bigger Elliott wave ending diagonal. An Elliott wave ending diagonal is a reversal pattern, and can once completed, push price into a sharp reversal. In our case we expect to see a three-wave A-B-C move, once wave V fully develops.
The Elliott wave ending diaognal will be completed, once we see a sharp drop below the lower Elliott wave ending diagonal line, and below the 1667 level.
Also, for further indication that the price can turn lower in days or weeks ahead can be a divergence on the Relative strength index below the chart.
Gold, daily
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B-C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
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structure is 3-3-3-3-3.
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a wedge shape within two converging lines.
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wave 4 must trade into a territory of a wave 1.
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appears primarily in the fifth wave position, in the C wave position of A-B-C and in double or triple threes as the final “C” wave.
Example of an Elliott wave ending diagonal:
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