Gold retesting top of the consolidation channel

Gold is at a crucial pivot level between bear and bull outcomes. Daily RSI is overbought enough to call for a short-term correction here.

Gold Bears want to see Gold fail below the upper trend-line of the year-old bear channel/bull-flag/consolidation, below 1675-80.  Bearish counts in Blue and Red target new lows that range anywhere from 1490 down to the 1300s. 

Gold Bulls want to see continuation of the persistent impulsive rise with short, shallow pullbacks. A possible bullish wave-count is shown in Black with wave E marking the last leg of an ABCDE wave (4) consolidation from last year's blow-off top (unlikely below 1592.1). An alternate bullish count in Grey requires a retest of the 1525 lows as wave 'c'.

Previous analysis and charts

9 Feb 2012: Gold's downtrend channel asserts itself

9 Jan 2012: Gold sitting below significant resistance

25 Aug 2011: Gold corrects at channel top - wave (IV) underway

9 Aug 2011: Gold at multi-year channel resistance

3 Aug 2011: There's No Fever Like Gold Fever

4 Nov 2009: Gold inflexion point at 1115

Gold medium term wave-counts

The blow-off top in 2011 started a correction that has lasted almost a year now. For the past few months Gold has been stuck in a slowly-contracting trading range between 1525 and 1642.

To end the correction from 1900, Gold needs to rally above 1800, where it has failed twice. But first it needs to break out of the Red descending channel. 

An impulsive rise that achieves a weekly close above the 1670-75 area (December Future) is needed to avert  a continued decline. A possible bullish wave-count is shown in the chart below to support this scenario. 

If a sharp decline is seen close to the upper channel boundary (similar to what happened after the end of wave D), we risk a further decline to 1480-90, or even lower to the channel base at 1300-1325 (both 4th waves of lower degrees).

Gold Dec Future Daily (3 years) 

A bullish wave-count in which Gold is ready to rally is shown in BLACK below. Too early if below 1585. Wrong below 1550. 

A bearish wave-count shows wave C extending lower towards 1480-90 or 1300-25 (depending on where wave B ends). Unlikely above 1575.