FX.co ★ GOLD: has the correction completed?

Gold has finally reached today the target we have been talking about the last few days. Our view was confirmed and the corrective decline reached our target at 1,215 where the 61.8% Fibonacci retracement of the 1,189-1,266 move is. This level was expected to prove support and a short-term bottom for Gold prices. Now Gold has the potential to move upwards to complete the move that started at 1,180. A longer-term trend remains downward, but as noted in previous analysis, the short-term pattern is bullish. We were expecting an upward corrective move towards 1,300. Gold has made 5 waves up from 1,180 to 1,266 (wave A), three waves down from 1,266 to 1,208 (wave B) and now we expect to see another sequence of 5 waves up (wave C final) towards 1,280-1,300.

So, what should be done now? Long positions are favored with 1,180 as stop. Target is a new high above 1,266. Most probably, the level to be reached is the 1,280. The short-term support is found at 1,200 and short-term resistance is found at 1,225-35. So for the new upward move to start, we need a confirmation above resistance and to hold the 1,180 lows. Next resistance level is the 1245-55 area where the downward sloping trend line stands as shown below.

Concluding, we expect gold to rebound upwards. This scenario is valid as long as it does not break below 1,180. We believe that if the trend line is broken upwards, we could easily see 1,280.