Gold: BOE Rate Decision A Catalyst
Meda Hoxha | Aug 04, 2016 09:22AM ET
The general view on gold remains the same, with the uptrend coming to its end and with a deeper correction on the table. However, recent developments suggest that this 5th wave up is an ED and it is probable for gold to make a new high towards $1400 region before entering into a deeper correction which initially targets 23.6% retracement of the 2016 rally and lower levels later on.
Gold Daily Chart - August 4, 2016
In yesterday's update we stated that a pullback down to $1360 levels would be healthy to the general trend, and in the early European session that is exactly where gold established its low, corresponding to the darker upwards channel of this (v) wave up. BOE decision to cut rates might have been the catalyst missing that will enable gold the fuel for its last run up to the $1400 level.
Gold 4H Chart - August 4, 2016
This kind of pattern allows gold to retrace down to the lower bound of the channel and still not invalidate the bullish scenario, however it is important that yesterday's high is broken today in strength.
Gold 4H Chart - August 4, 2016
Rally which followed immediately after BOE rate decision release is of an impulsive move (1-2-3-4-5), thus in the short term long positions are preferred with entries at 38%-50% retracement of today's rally and with stop loss at $1360. The highlighted box is an important resistance zone, thus a pullback would be justified in order to re-assure us on the strength of the trend.
Gold M15 Chart - August 4, 2016
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