Last week I suggested that Gold appeared to be topping out with price action having formed a rising wedge as it closes in on prior resistance, at a time when divergence had formed. (Gold – Further Downside Eyed After H&S Break).
The confirmation that I was waiting for was a break below the wedge support, which came a little earlier than I was expecting but still indicates that a broader correction, at least, is underway.
One of the benefits of rising wedges is that they offer possible price projections following the breakout. This is typically calculated using the size of the wedge opening, projected below the breakout point.
On this occasion, the opening is around $75 ($1,266-$1,191), which would give us a possible price projection of around $1,165.
Not only is this a previous area of support and resistance, it also coincides with the 50% retracement of the move from 3 December lows to 11 March highs.
Prior to this, Gold could run into support around $1,190-1,210, with it having been a key support and resistance zone over the last year.
N.B. At the time of writing, US retail sales, empire state manufacturing and PPI data has been released and the dollar has weakened off the back of it, which has sent Gold higher. If Gold breaks back within the rising wedge off the back of this, we may have to wait a little longer for the correction to get underway, assuming it still does.