Gold prices have managed to reach $1,220, where the upper resistance level of the downward sloping channel is. Prices were expected to be rejected in this area and turn downwards. Breaking below $1,205 is the first bearish sign that wave 4 has ended.

Gold pirces have finished their upward corrective wave (4) and are ready now to start wave (5) to new lower lows towards $1,170 which is our first short-term target. The initial wave count preferred is shown in the chart above. However we should also take into consideration the possibility that this downward move from $1,270 is only a couple of 1-2 waves and an extended 3rd wave is about to start. We have to wait for prices to unfold their wave structure in order to get more information and decide which wave scenarios are to be preferred.

The daily chart continues to confirm that trend is down in all time frames. So we remain short and we look for the longer term target of the broken Head and Shoulders pattern at $1,140. Short-term stop for bears is $1,220. Short-term support is found at $1,195.