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Some clear opportunity areas for gold futures

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There are times when Elliott wave traders have an advantage over those who use other methods for choosing entries and exits. That's especially true when the wave count is near a crucial decision point.

Such is the case for gold futures in their current price area. We believe the multi-year consolidation triangle will send price downward. On the other hand, a break of nearby resistance for the final wave of the triangle would signal that the main bearish scenario was wrong and that an alternate bullish scenario deserved consideration.

Regardless of which scenario plays out, Elliott wave traders can find the safest entry areas and placement of stops.

Our main scenario for gold futures is shown with black labels in the chart above. It counts the final wave (e) of the triangle as probably being complete, although a test of resistance near 1371.10 is still possible. The absolute upward limit for wave (e) would be a daily or weekly close above 1404.70, beyond which we would abandon the bearish triangle scenario.

Keeping with the main scenario, a strong downward thrust out of the triangle should take price to a new low for the decade, beneath the late-2015 low but perhaps not far beneath it.

As an alternative, shown with blue labels, a breach of the resistance levels mentioned should be viewed as a breakout, even though price might then retreat to make another test beneath the broken resistance.

In both the main and the alternative scenarios, the past several years of price action represented a corrective middle wave or [b] wave in the context of a larger [a]-[b]-[c] declining pattern. Even if the triangle fails, an upward break should be still be viewed as part of the corrective [b] wave.

Big-picture resistance areas to watch in the alternate scenario are 1509.10 and 1596.30. Either of those areas could put a cap on wave [b] and send price into declining [c].

The current peak of the 11-month price cycle agrees with the prospect that gold futures should fall away from resistance. If they cannot continue the downward momentum, then the middle part of 2019 might be a time to watch for a possible upward reversal to attempt a breakout.

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