Gold prices reached 1,237 near our first target area around 1,230, which we mentioned in yesterday's analysis. Prices are staging a small upward bounce that we believe will be short-lived and downward pressures will resume. Short and long term trend remains downward, pointing towards testing the 1,180 lows, and very possibly we will see new lows towards 1,140.

The head-and-shoulders neckline is clearly broken and we believe that a back test could happen today. The back test area is at 1,250-55 and the upward correction could see this level. Short-term support is found at 1,235 and then at 1,210-1,200. Short-term resistance is found at 1,248-1,255-1,266. The trend is downward and any upward bounce is expected to be met with selling pressures.

The downward move from 1,360 remains inside the downward sloping channel, and we can expect prices to try and test the upper boundaries of that channel near 1,255-60. Gold prices are expected to continue lower even if the upward bounce does not reach 1,255-60. This is very important resistance area that if broken could change our short-term view for gold. Concluding we remain short biased. Selling gold near 1,255-60 is preferred with new lows as a target. Breaking out of the downward sloping channel will bring us close to our short positions.