Source: thewavetrading: GOLD: Follow up of the short-term EWP | The wave trading

In this EWP update I am going to “leave behind” the overall count off the September 2011 high.

I only say that given the corrective internal structure of the up leg off the May low suggests  that price has not established a major bottom, instead price should be involved in unfolding a larger sideways move.

In my opinion the 3-wave up leg from the May low to the October high belongs to a potential larger Double Zig Zag that can challenge the September 2011 high.

Why?

Because the down leg off the October peak is corrective.

Therefore going forward I am working with an (ABC) = wave (W) in place at the October peak = 1798.50, followed by a pullback wave (X).

The issue is now to assess if last week´s bullish candlestick has established the bottom of the wave (X), slightly above the 50 wma where we also have the 0.5 retracement.

If the assumed wave (X) is in place then the pending Zig Zag up could reach 2012 $ (Equality target).

If this is not the case then the next down leg should attempt a bottom at the 0.618 retracement = 1631.

In the daily chart below we can see that price has reached the horizontal resistance and the 50 dma that could result in a pullback.

Friday´s doji and today´s small range body are suggesting that price could have began a consolidation phase.

If the pullback is corrective than we would have the confirmation that the correction off the October 10 high is over.

The immediate support is located at the 20 d ma = 1718.5

The rebound off the November 2 nominal low could have unfolded a Zig Zag with an Ending Diagonal wave (c). If this count is correct then price should carry out a corrective pullback with a target in the range 1715 – 1697