FX.co ★ Gold wave analysis for October 16, 2014

Gold price, despite breaking below the short-term trend line support two days ago, it managed to stage an upward bounce that broke above $1,238 and reached the 50% retracement at $1,250. The entire upward move from the $1,180 lows is very erratic and most probably corrective in nature.

Blue line = support

Red line = resistance

Gold price remains in a wave 4 complex pattern and has reached the 50% retracement. Despite making a dip to $1,220, the precious metal has spiked towards $1,250 and has the potential to move even higher towards the red trend line resistance. Nevertheless the entire upward move still is viewed as corrective to the larger down trend.

In the 30 minute chart above we observe the short-term price action in Gold. A sideways triangle is being formed and a break above $1,243 could start an upward bounce towards $1,255-65 area equal to the first upward move from $1,220 to $1,249. Breaking below $1,236 will cancel this pattern and this bullish potential. My longer-term view remains bearish as I expect the Gold price to move lower towards $1,050-$1,000 over the coming weeks.