Gold prices broke yesterday the downward sloping resistance trend line. Prices have most probably ended the downward move from 1,360 with a wave 5 failure (failed to produce new lows). Now our favorite scenario is that we should at least retrace the 38% of the decline from 1,360.

So as long as prices trade above 1,209, we could expect prices to reach at least 1,270, where the 38% Fibonacci retracement is. Short-term resistance is found at 1,250-58 and breaking above this level will confirm that the downward move is complete. The alternative wave scenario we have implies that prices are still within their 4th wave of bigger degree and we should expect a new low.

The more prices delay to break above 1,250-58 resistance the more possible the alternative scenario is. The more time it takes for prices to break above resistance, the more chances we have of being in wave 4 and to see new lower lows towards 1,180.