Gold in U.S. dollars (XAUUSD) could soon make a primary degree peak.
The daily Gold chart courtesy of Trading View illustrates the Elliott wave count since October 2022.
Elliott wave analysis is a process of breaking markets into segments. You start from the most significant high or low to discover the main segment. From that point break the main segment into smaller segments.
For Gold the most significant bottom occurred in September 2022, that’s the starting point. The subsequent bull phase that lasted until May of 2023 is labeled Primary wave [1]. Please note the multi month decline after the May 2023 peak terminated near the bottom of a smaller correction that ended in late February 2023.
Analysis of the next segment begins at the October 2023 bottom labeled Primary wave [2]. The bull move from October 2023 to December 2023 appears to be an Elliott wave series of “one’s” and “two’s”. In rising trends this is a very bullish configuration, leading to a powerful rally. The subsequent rally from the December 2023 bottom to the May 2024 peak was very powerful and sustained. In Elliott wave terms this was an extended third wave, the mid portion of these structures is usually smooth and steep.
When an Elliott motive wave begins with a series of “one’s” and “two’s’, the motive wave ends with a series of “four’s” and “five’s”. The action after the May 2024 top labeled Minor wave “3” appears to be a series of “four’s” and “five’s”.
Assuming this count is correct Gold could in Intermediate wave (5) of the motive wave that began in October 2023. After completion of Intermediate wave (5) of Primary wave [3] there’s a high probability Gold could begin a multi-month decline.
The weekly Gold Futures chart courtesy of Barchart.com updates the Commitment of Traders (COT) report.
Evidence from the sentiment and momentum dimensions is used to support Elliott wave analysis.
The weekly COT reports the Futures contracts holdings of three groups: Commercials, Large Speculators, and Small Speculators. The Commercials are the group you want to follow because they hold the most Futures contracts.
The current sentiment of Gold Commercials is very bearish, they have the largest net short position since the top made in March 2022.
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