On the daily chart of gold we see a bullish pattern; a five waves up from November 2015 low followed by a turn down from 1375 that we believe is going to be a corrective move because of overlaps. Based on latest price data we are tracking a double zigzag now that can be headed towards the 1180 area where buyers will try to cause a turn. Technically speaking we see this market in bullish mode as long as 1046 is not taken out.
Regarding the 4h chart, we see Gold moving sharply lower, away from 1337 swing high where market found a top of wave X that belongs to a big complex decline on a daily chart. So we are tracking a double zigzag which should see more weakness after black wave B bounce. As we see on the 4h chart, the first wave A could be now finished as market unfolded five minor sub-waves within it, and as of recent intra-day bounce higher we believe that wave B could be in motion.
As we know the Elliott Wave theory suggests that after every five wave development, a three wave contra trend reaction will follow, so in our case we now expect a temporary three wave rise in black wave B, that will ideally find some resistance and a turning point lower around the previous wave 4 at 1215-1231 level.
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