FX.co ★ Gold analysis for February 4, 2013

Gold Elliott Wave
For the last few days Gold was trading sideways, corrective (C) wave (coloured green) of the bigger (Y) wave (coloured red) was developing. During the Friday's European session we could observe strong ascending movement toward the 1,682.21 level and we can consider this move as the end of the corrective wave 2 (coloured blue). Therefore, during the early New York session this commodity did not manage to hold this level and the price retraced back to 1,666.62 level. Today gold is trading around 1,663.80 level and we are expecting to see continuation of the bearish move for the next few days. In accordance with our wave rules and taking into account that wave 3 should retrace 161.8% of wave 1, we can define the potential targets with measuring wave 1 with take profit at 1,639.99 (161.8% of wave 1). To reduce the risk, we can use invalidation at 1,682.18 level as stop loss.

Support and Resistance
(S3) 1,636.0 (S2) 1,648.3 (S1) 1,658.4 (PP) 1,670.7 (R1) 1,680.8 (R2) 1,693.1 (R3) 1,703.2

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 1,663.00 with stop loss 1,682.18 and take profit at 1,639.99 are recommended.