Gold broke our short-term resistance at 1,395 yesterday and signaled that a bounce was coming. Prices moved higher towards 1,415. This price is in the middle between the 61,8% and 76,4% Fibonacci retracement from the highs to 1,372. This is a place where the rally is expected to pause and the downtrend to resume.
Prices are expected to make a new low in the intermediate term towards 1,350-60. The resistance at 1,420-30 is very strong and we do not believe that it is going to be broken upwards. Instead, we believe that prices are heading lower with the first short-term support at 1,400. If this support fails, then we should see prices to go towards the support level of 1,385. If that support fails too, then we should see our target of 1,350-60.
The upward price pattern is corrective. Prices have risen towards 1,415 in three waves, a pattern that suggests upward correction. The trend remains down unless there are bullish signals. Such bullish signals will be a 5 wave upward move and a break above 1,421. Concluding, we remain bearish with final target at 1,350. Stop for bears is at 1,421. Prices are starting to fall down in an impulsive pattern as we can see in the 1 hour chart prices have already completed 5 waves down from 1,415.
