Gold made a short-term top yesterday at 1,260. Prices pulled back as the rally that started from 1,208 was not strong enough to break above the recent high in one go. That is why prices got rejected and we saw a pullback towards 1,240. As mentioned yesterday, bulls should be worried if prices break below 1,238 and this did not happen yesterday. Prices found support at 1,240 and right on the upward sloping trend line. Current wave formation implies that we are still in wave C up at least (if not new upward move).

The downward move from 1,260 to 1,240 that was made yesterday is overlapping and that is why we believe it is a corrective pattern. Today, prices broke above the last high at 1,251. We believe that wave C upwards continues today with target above 1,266 and with optimum target at the 1,294 level where wave A is equal wave C. Stop for bulls is now the 1,243 price level.

The upward move from 1,208 has completed five waves 5. Usually, wave C ends above wave A when the correction has an upward momentum. In a more bullish scenario we could say that only wave 1 of C was completed at 1,260. This implies that wave C could reach even 1,350. But for this scenario we have to be patient and keep a close eye on the formation of price movements.

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