Gold has broken down as expected by our last analysis ending diagonal pattern, and we now expect prices to make a retracement of the entire rise from 1,250. Prices are expected to move at least towards the 38% Fibonacci retracement which is at 1,318.
Short-term support is found at 1,334 and then at 1,318 (our first target). Short-term resistance is found at the recent high of 1,361 and then at 1,375. We expect prices to continue their move downwards and start a pattern of lower lows and lower highs in the 1-hour chart.
The daily chart confirms that prices have met strong resistance in the 1,350-1,375 area. This could be the right hand shoulder forming. This is a bearish scenario that could lead prices towards 1,250 again and test that important support. If broken then we should anticipate 1,140. If prices stop the decline above 1,300, then the chances of seeing a new higher high above 1,433 are increased.
