According to our analysis published on 5th August, we anticipated that weak data release on Automatic Data Processing Non Farm Employment Change provided some strong bullish momentum to gold by making it reach for its 1830 resistance again, giving a psychological blow to the retail traders by approaching the critical level for the third time. Fortunately strong data release from Institute for Supply Management on Services PMI, reversed the gains on gold and pushed dollar higher. Gold is still following our dovish signal and is expected to go lower but certain factors discussed below might cause a short term hurdle in gold from breaking out below 1781. From current market scenario observing the gold chart in weekly under the lens of elliot wave pattern, the golden commodity has begun its bearish impulsive wave structure and is either still in 3rd bearish impulsive wave or is about to initiate a 4th bullish reversal wave before extending any more fall. 

BULLISH AND BEARISH POSSIBILITIES / CONDITIONS :

The relative strength index in four hourly chart is showing some highly oversold condtions, somehow managing to head up above level 30 while in daily chart still staying below the belt in the oversold conditions. This depiction of highly over sold situation in itself calls for a temporary pull back to correct its technical indicators. The market has taken an impulsive exit from the ichimoku cloud in daily as well as weekly time frame. According to the lower surface of ichimoku cloud, it equally syncs with the level of our lower trend line i.e 1789-1804, depicting that as a no trade zone and more chances of the continuation of bearish trend. As we can see in daily chart that the commodity has completely reversed the gains from March, we will be witnessing some major bearish breakout now but retail traders should be careful with the unexpected bullish reversals. 

XAUUSD

Aug 09 2021

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