Technical outlook:
Gold prices reversed sharply on Monday through the $,1851-52 lows before finding bids again. Importantly, the yellow metal has held above its previous swing low of around $1,850, which is encouraging for bulls. A high probability remains for a continued rally through $1,940 as bulls will regain control from here on.
Gold is unfolding a Down Gartley since the $1,850 lows and has completed two waves within the structure around $1,909 and the $1,851-52 levels respectively. If the above structure holds well, the metal should resume its third wave higher towards the $1940-45 mark to terminate the corrective rally. A push through the $1,893 initial resistance will confirm that a bottom is in place around $1,851-52.
Gold prices are expected to face strong resistance around the $1,940-45 zone, which is also the Fibonacci 0.618 retracement of the earlier drop between $1,998 and $1,850. The high probability remains for bears to be back in control thereafter. They could drag prices lower through $1,850 and towards $1,675 going forward.
Trading plan:
Potential rally through $1,940-45 against $1,850
Good luck!
