- The drop is deep enough to confirm a reversal of the trend from $1,720.49
SINGAPORE: Spot gold may extend its bounce towards a resistance at $1,803 per ounce, following its stabilization around a support at $1,786.
The drop over the past few days could be too linear to sustain. Market seems to have finally found a support at $1,786, which is strengthened by a similar one established by a rising trendline.
However, bulls are advised not to cheer the bounce too much, as it may end in the range of $1,803-$1,817.
The drop is deep enough to confirm a reversal of the trend from $1,720.49.
On the daily chart, the metal seems to be riding on a wave C, the third wave of a three-wave cycle from the August 7, 2020 high of $2,072.50.
This wave count suggests an extension of the wave C below $1,684.37. Currently, this wave is unfolding within a wedge, the lower trendline of which points at a target around $1,684 as well.
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