Gold prices have made an upward bounce that reached the 38% retracement. This was most probably wave A of the correction. Wave B down reached 1,222 and we believe it is time for another wave up. We expect wave C to complete the upward correction near the red resistance trend line that comes from 1,360.
Prices are expected to rise for the final wave C towards the 50% Fibonacci retracement. This should be the end of the upward correction and the resumption of the down trend. Maximum upward move should be the 61,8% retracement. Any move above that level will increase the chances of a trend reversal. Only if prices break above 1,360 will the long-term downtrend change.
Short-term support is found at 1,220-1,210 and short-term resistance is found at 1,235. The daily chart shows how prices have back tested the broken neck line. We expect the upward corrective bounce to continue as the correction so far is too small relative to the 1,360-1,210 decline regarding time and price relationship. We need the correction should take some more time to unfold. We remain in the short term bullish as long as prices trade above 1,210.
