Gold and the False Break - 1065 Key Level

With price meeting Nov 2014 low, technical traders are looking to the current level as a hot spot, where a reaction higher or break lower is likely to occur. The retail sentiment at FXCM is showing 4 times as many traders who are long versus who are currently short. These short traders become a pool of future sellers when they decide to close out their trade.

From a technical perspective, there are 2 wave relationships showing up in the 1130-1135 zone...so these traders MIGHT be right. If a break does occur, there is another wave relationship at 1093 and around 1065.

The Elliott Wave labels on the chart suggest we are in an expanded flat correction and prices are likely to visit above 1300 in the coming months. The question is, how low does this expanded flat push?

The false breakout zone extends to 1065. The deeper we cut towards 1065, the better the risk to reward ratio.

A large reason why I'm favoring the expanded flat is the slope of the sell off since January. This recent sell off has a much softer slope than the prior 2 waves. Therefore, it is behaving more like a 'B' wave than a 3rd wave.

Best of luck!