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Topic: Identifying Correction Zones and Preparing for the Next Big Wave
Hello to all traders,
The gold market is currently entering a correction phase, which I estimate will be “a bit boring” and test our patience. To avoid getting caught up in the market noise and stay away from the rush, today I will analyze the overall situation on the weekly (W1) and daily (D1) timeframes to get a comprehensive understanding.
1. Momentum Analysis
– Weekly Frame (W1): Momentum is currently showing bearish reversal signals. If downward pressure on prices continues into the end of the week, we could be looking at 3 to 5 weeks of bearishness or consolidation (~15 trading days).
– Daily Frame (D1): Momentum lines are currently converging in the “oversold” zone.
– => Conclusion: The conflict between the downtrend in W1 and the possibility of a bullish reversal in the oversold zone in D1 suggests that prices may move sideways over the next two weeks.
2. Elliott Wave Counting Scenario
Depending on the evolution of the current structure, I have prioritized two scenarios corresponding to an adjustment period that may last 2-3 weeks:
🟡First scene: Triangular structure (Triangle – Figure D1)
Diagnosis: We may be moving within the last wave (e) of a triangle pattern.
– Characteristics: Prices will compress significantly in the next few days, fluctuating within a narrow range, and without a clear direction.
– Confirmation signal: A strong and sharp upward breakout above the triangle border will mark the end of the correction and the beginning of a new up cycle.
🔵Second case: compound correction (double zigzag – WXY)
– Diagnosis: The ABC structure is completed, marking the formation of W wave. Once the price breaks through the bottom of wave W, the formation of wave X will be confirmed.
– Characteristics: Y waves may be continuous. The difficulty with this pattern is that the Y wave may develop into a “flat” or “triangular” structure, so you must wait for the pattern to complete before final confirmation.
3. Trading strategies and techniques
– Psychological aspect: Prepare for the “final compression” phase of the correction waves (especially the e-wave). There is a lack of clear direction at this stage and trading is very difficult.
– Main level of observation: We focus on the upper boundary of the triangle (trend line bd).
– Action Plan: If the price breaks this level strongly, accompanied by upward momentum on the weekly and daily frames => this will confirm the beginning of a new long-term and sustainable uptrend.
Note: At this time, “patience is profit.” Avoid placing too many trades within the compression zone to protect your capital.
Wish you self-discipline in trading!
#XAUUSD #ElliottWave #TechnicalAnalysis #GoldPlan #TradingStrategy