Gold price had reached overbought levels, and in our past analysis we mentioned how crucial it was for the bullish trend to hold above support levels at $1,319. Short-term trend has changed to downward as Gold price was making lower lows and lower highs in the 4-hour time frame as shown in the chart below. Gold price has also broken the upward sloping trend line support and is heading towards the Ichimoku cloud support at $1,290.

We warned that bulls should be very cautious and we preferred the strategy to take some profits from long positions and raise stops as this downward move is unfolding into a bigger decline that could bring Gold price below $1,300 soon. Bulls will be happy if Gold price manages to break above the downward sloping red trend line resistance as shown in the chart above. As long as this trend line is above current market price, our view will remain bearish or neutral.

The rejection at the long-term downward sloping trend line is important. This could affect Gold price in a way that will bring it back towards $1,260-70 towards the blue upward sloping trend line support. $1,293-95 is important short-term support as this is the 38% Fibonacci correction level of the rise from $1,237 to $1,331. Breaking below this support will bring the precious metal towards its next important support at $1,286.