Gold Tests a Key Resistance Zone

Gold (XAU/USD) has staged a strong recovery from its recent low and is now testing a significant resistance area around the 161.8% Fibonacci Extension.

The highlighted green zone represents a critical decision point. As long as price remains below this resistance, the broader market structure continues to favor the bearish scenario.

Wave 4 Appears to Be Near Completion

According to the current Elliott Wave count, Gold is likely completing Wave 4, which is typically a corrective phase before the final Wave 5 decline.

The current rebound may end within the resistance zone, allowing sellers to regain control and continue the prevailing downtrend.

However, a decisive breakout above the green resistance zone would invalidate the current Elliott Wave count, requiring a reassessment of the overall market structure.

Downside Target Remains Intact

If the resistance zone successfully caps the rally, XAU/USD is expected to resume its decline toward the next Fibonacci Extension support levels.

The primary downside objective is located near the 423.6% Fibonacci Extension, where Wave 5 is projected to complete.

Momentum Signals Are Beginning to Weaken

The Awesome Oscillator (AO) remains in positive territory, but bullish momentum is beginning to fade.

A contraction in the AO histogram followed by a move below the zero line near the resistance zone would provide additional confirmation that bearish momentum is returning.

Conclusion

XAU/USD is approaching a crucial technical resistance area. A rejection from the 161.8% Fibonacci Extension would strengthen the bearish outlook and support a continuation toward the projected Wave 5 target.

Conversely, a sustained breakout above the resistance zone would invalidate the current Elliott Wave structure and suggest that a new market scenario is developing.