Gold prices remain below the 1,245-58 resistance area. We prefer to remain neutral as there is no clear trend in the short term and prices are somewhat oversold in the daily level. Although the longer term trend remains down, we believe that there is increased probability of an upward bounce towards 1,300.
Our elliottwave count expects the final 5th wave to unfold. The wave structure from 1,360 is almost complete. We need one more new low to complete the pattern. Howeber there is also a chance that the 5th wave is a failure and doesn't make a new low. Time will tell, but since prices are consolidating in a triangle, I expect the new low to come soon. The triangle consolidation is a correctie pattern that usually comes before the final move.
The daily chart confirms that trend remains down as prices continue to trade within the downward sloping channel. As long as prices stay below 1,258, we should expect a new low towards 1,200-1,180 to complete the downward move from 1,360. So bears could use 1,258 as stop and bulls the same level as a bullish signal.
