FX.co ★ Gold analysis for January 10, 2014

Gold prices are rising as expected from the first support area of $1,220 that was tested. Gold is most probably unfolding in an upward wave C that could put to the test the $1,275 resistance level. Our target for a complete wave C is $1,290 ($15 higher or lower).

The $1,290 target is derived if we assume wave C will be equall to wave A. However, we only need a higher peak than wave A to complete the upward correction. Resistance is found at $1,245 and we will see $1,270 if broken. Otherwise, the short term support of $1,225 could be tested.

The daily chart is showing that there is still a downtrend. The slope of our MA remains negative. The gold is trading within a downward sloping channel. Prices are trying to test important resistance now at $1,275 and that is where many information will be derived. Breaking that resistance or being rejected by it, will give us a lot of information for what to expect next. Our preferred scenario implies that we are in an upward corrective phase within a big downward impulsive wave. We should sell when prices reach $1,270 and if a top formation is confirmed.