Gold remained yesterday below the 1,668 resistance which was our line in the sand for our bearish view. Prices broke below the support level of 1,330 and then reached our next target of 1,307 making a new low at 1,304. The daily chart clearly portreys the downward trend and the fact that even in the daily chart, the pattern looks impulsive, strengthens the bearish scenario.

The decline is impulsive and we believe that there is more downside. Critical price level for the bearish scenario that is shown in the chart below, is the 1,355-60 level. If prices manage to break above that price level, then our bearish scenario according Elliott wave count will be canceled. Our favorite Elliott wave count is shown in the chart below.

Still inside the downward sloping channel, we are most probably inside the extension of wave (3) of the 3 downside. The trend is clearly down, resistance is found for the short term at 1,325-30 and this is where one could try to sell with a 1,355 stop. We believe that it is time for a small upward bounce, but we cannot cancel the possibility that this free fall continues towards 1,270.

Concluding we remain bearish. Important trend reversal could be confirmed at 1,355-60 which is the major resistance now. Buying near 1,300 with a 1,270 stop could be justified, but bulls will need to break resistance for this bounce to have a meaning. Otherwise, be ready to sell again if prices reach 1,340-50.