FX.co ★ Gold: Wave analysis for January 25, 2013

Gold Elliott Wave
All week gold was traded in a downward move, corrective (A) wave (coloured green) of the bigger (Y) wave (coloured red) was developing. Yesterday during the European session we could observe strong descending movement from 1,683.15 toward the 1,664.93 level. Therefore, during the New York session this commodity continued trading in a bearish mood and the price reached a 1,663.48 level. We can consider this move as the end of the impulsive 3 wave (coloured blue) of the bigger (A) wave (coloured green). At the moment gold is trading around 1,669.15 level and we are expecting to see the continuation of the downward move when development of wave 4 (coloured blue) ends. In accordance with our wave rules and taking into account that wave 5 should retrace 161.8% of wave 1, we can define the potential targets with measuring wave 1 with take profit at 1,665.02 (161.8% of wave 1). To reduce the risk, we can use resistance at 1,683.15 level as stop loss.

Support and Resistance
(S3) 1637.1 (S2) 1650.6 (S1) 1658.7 (PP) 1672.2 (R1) 1680.3 (R2) 1693.8 (R3) 1701.9

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 1,675.85 with stop loss 1,683.15 and take profit at 1,665.02 are recommended.