Gold prices have met the minimum requirements for 5 wave, decline from $1,260, as on the last session of 2013, prices made a new lower low for wave 5. We were expecting prices to make the low below $1,1170 but, since requirements were met, we can conclude that the decline is over. The gap up opened today will most probably be filled. Prices opened at $1,225 and are expected to test $1,200 again.
Gold prices are expected to back test the broken downward sloping blue channel. We believe that a short-term up trend could be at its beginning with $1,250-70 target. This target will be canceled if prices break below $1,180. Strong resistance is found at $1,255 and then at $1,274. We believe that an upward corrective move could reach those levels. We however do not feel it is worthwhile for now to take the chances with long positions. Our risk is at $1,180. So this is our stop for long positions. If you want to trade a long position, then wait for the back test of the broken channel.
The daily chart continues to confirm that trend is down in all time frames. The bigger trend remains to be down. That is why we do not prefer to take long positions even for short term trades. Our longer term target of $1,140 is still very possible if our preferred scenario that we are in an upward correction is correct. Important trend change reversal will occur if prices break above $1,360.
