The gold price continues with its downward moves towards the support area of $1,140-20 as expected by the previous analysis I had posted. We are close to entering the buy area and to reaching the reversal phase in gold prices. Stochastics is now entering the oversold area and we should only be looking for buy actions now.
Green rectangle - impulsive move area
Blue rectangle - corrective move area
The gold price is below the Ichimoku cloud. The price is making lower lows and lower highs. It has reached the 61.8% Fibonacci retracement, and Stochastic in the 4-hour chart is at the oversold levels. We are at a buy area between $1,140 and $1,120.
Blue lines - price projection
Green rectangle - impulsive move area
Blue rectangle - corrective move area
The daily chart above shows how the price is approaching the daily cloud support as the daily stochastic has just now entered the oversold levels. We should be patient as the stochastic needs to show some divergence relative to the price before we get the buy signal. The gold price could make a fresh low near $1,120 where the 78.6% Fibonacci is. I am neutral, but will be looking to open long positions with the $1,100 stop and new highs as targets.
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