Technical outlook:
Gold prices dropped through $1,851 on Wednesday after hitting the $1,870 high on Tuesday. The yellow metal might attempt yet another push through $1,880 before reversing lower again. On the flip side, a consistent drop below $1,848 would drag the price lower towards $1,843 confirming a potential high in place at around $1,870.
Gold prices are retracing from a larger degree downswing between $1,998 and $1,786. The first leg of correction is either complete at $1,870 or would complete around $1,880 soon. The metal would then proceed towards $1,820 to terminate its second wave, before rallying through $1,920 as the last wave unfolds.
The trading strategy remains to buy on dips in the next several trading sessions and until $1,786 remains intact. The Fibonacci 0.618 retracement of the recent rally is also seen through $1,816 as projected on the 4H chart here. The probability remains high for a bullish bounce if prices manage to drop through the above zone.
Trading plan:
Potential rally towards $1,920 against $1,780
Good luck!
