Gold prices have tried to make an upward bounce, but the bulls were not strong enough to break above $1,250. Everyone is waiting for the FED as tonight we will have more information regarding the potential tapering of the QE program. We expect volatility to rise and prices to break important resistance or support levels. Current price action favors bears as the rise from $1,222 is not impulsive, whereas the decline from $1,268 seems to be incomplete.
Gold prices are now trading near $1,230 and the two wave scenarios we mentioned yesterday are still valid. The black scenario which is our first choice, expects wave 5 down to unfold towards $1,180 or lower. The red scenario which is our alternative, expects prices to move towards the downward sloping red trend line near $1,275-85.
The daily chart continues to show that trend is down, something that supports our bearish preferred scenario of a new lower low. Short-term support is found at $1,220-$1,210. If it is broken, we will have confirmation of the bearish scenario. Breaking above $1,250-55, will make us turn towards the alternative scenario.
