Gold as expected reversed lower in an impulsive manner. However, our target remains 1,300 and lower in order to at least meet the conditions of a downward correction. Our view remains that the entire rise from 1,180 is a corrective A-B-C wave and now we start a new downward impulsive move. From 1,348 we have seen 5 waves down, three up and another 5 waves down. Our Elliott wave count is shown in the chart below where I have also added the alternative of a triangle corrective pattern that is also possible but not my first choice.

So what is our strategy? We remain bearish as wave 2 gave us a great opportunity to go short at the 76.4% Fibonacci retracement. We expect prices to break down and out of the triangle soon confirming our bearish view. Our stop for our short position remains the 1,348 price level. Bears will need to see a break below 1,313 that could push prices towards 1,290. Bulls, on the other hand, want prices to first break above 1,339 and then test the highs. Of course there will be the ultimate test for bulls. If another failure comes, the downward move will be strong.

The daily chart above shows that prices still trade within the upward sloping trend channel and that is why we are still cautious with our bearish feelings. The first signs supporting our bearish view are there, but we will also need to break below 1,287 and 1,260 in order to target a new low or a double bottom at 1,180 and lower. Concluding we remain bearish. For today we want prices to break below 1,325 support and head towards 1,308. Above we have resistance at 1,340 that should not be broken.