Technical outlook:
Gold prices dropped through $1,849 during the early hours of trade on Monday before pulling back higher to $1,856. Gold is seen to be trading close to $1,853 at this point in writing. It is expected to drop to at least $1,840-45 before resuming higher again. The structure remains constructive for bulls until above $1,786.
Gold rallied through the $1,874 mark on Friday before hitting resistance and reversed sharply to $1,847. The recent upswing might be in place between $1,786 and $1,874, which needs to be retraced. Potential remains for a drag lower through $1,820 levels before the third leg higher rises to $1,920.
Gold is working on a counter-trend rally to retrace its larger degree downswing between $1,998 and $1,786, The Fibonacci retracement level of 0.618 of the downswing is passing at $1,920. The likelihood of a bearish reversal from this level remains high. Traders might be preparing to hold long positions until $1,920.
Trading plan:
Potential rally through $1920 against $1786
Good luck!
