Gold prices are still in a corrective phase and there seems to be a sideways pattern forming that can help us define important support and resistance levels that if broken could push prices signifiacantly towards either direction. Prices have moved impulsively from 1226 to 1258. After that high was made, prices are trading within that trade range for several days. This creates a sideways pattern with clear upper and lower boundaries.
The purple boundaries as shown in the chart above are what we were talking about. We believe that it is more probable for prices to make an upward break towards the 61,8% Fibonacci retracement. The first upward bounce reached the 38% retracement. So we should expect the third and last part of the upward correction to move towards 1260-70 where the 61,8% Fibonacci retracement is.
The longer term trend remains down, but we still feel the 5 waves down from 1360$ are complete and we should expect a bounce towards 1270-1300$ to complete the corrective bounce. Important short term support levels are found at 1238-1226 and short term resistance levels are found at 1248-1255$. Concluding, buying near support in order to play the bullish scenario of the upward correction towards 1270-1300$ is preferred.
