XAUUSD – Potential Ascending Leading Diagonal as Wave (1)
The structure developing from the $3,886 low appears to be forming a leading diagonal, which would suggest we are currently building out a Wave (1) of a larger bullish sequence. This aligns with the broader market context after a completed corrective decline, where price found support near the 0.786 Fibonacci retracement and bounced, indicating demand stepping back in.
Key Structure Notes
We can observe a 5-wave contracting rising wedge pattern:
Wave (A) pushed higher, beginning the diagonal.
Wave (B) retraced sharply but respected deeper fib levels.
Wave (C) continued the rising channel structure.
Wave (D) held the lower boundary trendline.
Wave (E) completed near the upper resistance slope before pulling back.
This price action is characteristic of a Leading Diagonal Type 1, where:
Wave lengths overlap,
Momentum is inconsistent (confirmed by RSI divergence),
The market transitions from bearish compression into early bullish reversal.
Current Price Behavior
The pullback into the mid-range support zone presents a potential Wave (2) retracement, likely holding above the Invalidation Zone near $3,843. As long as price remains above that level, the bullish outlook remains intact.
A break and sustained move above $4,046 would greatly strengthen the bullish impulse scenario, opening the door to a Wave (3) extension, which should be significantly stronger than Wave (1). This aligns with the projection arrow toward higher levels, potentially retesting the previous highs and beyond.
Invalidation Level
Wave (1) low at $3,886 and Fibonacci 1.272 extension near $3,843.
Any close below this level invalidates the diagonal and reopens the bearish continuation path.
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