The current XAUUSD structure hints at a bearish trend. The potential 5-wave impulse consists of primary waves ①-②-③-④-⑤.
With impulse ① competed and the upside zigzag (A)-(B)-(C) correction in wave ② looking exhausted, we expect markets to start sliding lower.
The decline will take us under wave (B) first, below 1560.93. If the breakout below that level is sustained then the likelihood of this opportunity being a 5-wave bearish leg will increase.
However, prices could reach a level below wave (B) and then reverse. This alternative scenario sees the correction in cycle wave IV as a triangle. The triangle is part of a cycle degree impulse that has more upside in order to complete.
Here, the primary ① is a corrective Ⓐ and part of the assumed triangle. Thus, a bullish zigzag in wave Ⓑ can be expected to end a little higher.
The completion of the zigzag could take us near the 1684 level. This will be where intermediate wave 5 will be at the 78.6% of minor impulse 3.
Once completed, of course, we can expect the market to start moving down in wave Ⓒ near the 1506.40 area. Here, it will be at the 78.6% of wave Ⓑ.
