Gold managed to reach previous highs but prices got rejected at resistance. This first failure to break above the last high is not something bulls should worry about as it is very common to break resistances after second time. Gold is pulling back down now (currently at $1,285) to test suport levels. The sidways triangle was broken upwards and is now being back tested.
Gold short-term support is found at $1,280,1,275, and $1,266. Short-term resistance is found at $1,288 (pivot) and then $1,298 where the previous high is. We believe that eventually support will hold and prices will break above resistance and make a run towards $1,320-40. Breaking below the upward sloping trend line will be bearish and we will cancel our bullish scenario.
Concluding we remain bullish biased as long as prices trade above $1,275 and we expect the upward correction that started at $1,208 to end near $1,320-40. Today it is crucial for prices to trade above $1,288. Moving above that level will push prices towards $1,298 to be tested once again. I favor entering long near $1,283-80 with 1,275 stop and target 1,295. If $1,298 is broken, I believe we will see an acceleration towards $1,330-40.
