The monthly chart shows that XAUUSD is being rejected again from a familiar resistance upside of 2060 and is now pushing below the May 2011 high of 1917. On the chart, you can see a strong two-month pullback which can confirm that we have already hit the fifth upside long-term wave. We could see a test of the critical uptrend resistance of 1740 further and a break below is required to confirm that long-term five waves are over.
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The Weekly XAUUSD chart reveals that a complex Elliott Wave consolidation in the possible wave is coming to an end with the last point F (short-term correction C) to be checked in the coming days and weeks. A break below the 1710-1740 zone will lead to a confirmation of the five waves upside-finished. There is no bullish price action at this point so we could see a bearish extension next week.
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As the famous trader says…
“Limit your size in any position so that fear does not become the prevailing instinct guiding your judgment.”Joe Vidich
How to trade this?
It is a fact that a strong upside support for Q3 is 1710. If we get a confirmed extension lower in the coming weeks below 1710 we could see a complete downside reversal lower. Near-term, short-trade entries have a higher probability of success. We can open the short trade here with a bit of risk and stop the loss of 1910 or we can wait for a bounce to 1900 and then enter the short trade, although a bounce probability is much lower. You can trade this price action with the options as well.
