FX.co ★ Gold wave analysis for May 7, 2015

Gold price has reversed from the 61.8% retracement as we expected and has started making lower highs and lower lows on the 4-hour chart. The trend is bearish as the price is below the Ichimoku cloud and, according to my wave analysis, we should see a strong downward impulsive move soon that will break below $1,170.

Blue line - support

Gold price has also broken below the short-term support at $1,185 and has given a second sell signal after the one at $1,200. The price is expected now to test $1,170 and will most probably break below it towards $1,150-30. Resistance is found at $1,195-$1,200 and a break above this level will not be a good sign for bears.

The weekly chart remains bearish as the price is moving below the tenkan-sen red line indicator. The longer-term trend remains bearish and I expect a move towards $1,000 over the next month if we break the critical support at $1,130. The longer-term trend changes on a weekly close above $1,260.