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.
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