Gold bounced off support levels at 1,315 yesterday and managed to break above the short-term resistance. It is now testing the previous highs at 1,349-50 area. We remain short with this level as a stop, reverse with 1,385 first target if resistance is broken. If the price gets canceled once again at that price level, then we should expect another leg down towards 1,300 at least.
Gold prices are trading within the two blue trendlines and if one wants to trade this metal in a safe way, then one should wait for a breakout to occur. Otherwise, we can prefer short positions near the resistance and long positions near the support. In each case, the positions should be stopped and reversed if a trend line breaks. Gold if rejected will fall towards 1,300-1,305 and then we will see if it has more downside potential. Falling towards 1,300-1,305 will not cancel any bullish potential.
Gold has bounced just right off the 38% Fibonacci retracement and pushed back up towards the highs. We can expect another leg down towards the 50% or 61,8% retracement. Bulls should get worried only if the price fall further than the 76,4% retracement.
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