Technical outlook:

Gold has managed to bounce right at the 6-month support trend line seen on the daily chart (not depicted here). Please note that the rally looks to be corrective till now and it needs to clear through $1257/58 levels at least and also $1264/65 levels to produce an impulse wave and hence confirm that further upside remains intact. At present, the wave structure remains constructive for bulls and the resent drop from intraday highs is just a mere retracement. Please note that the counter trend resistance trend line is passing through $1265/66 levels for now and a break above that confirms that a meaningful bottom is in place and that the yellow metal is heading towards fresh swing highs towards $1350/90 levels in the weeks to come. Please also note that Gold can still drop towards $1235 levels just in case to test support there and then reverse sharply.

Trading plan:

Remain long for now, stop at $1225, target is open.

US Dollar Index chart setups:

Technical outlook:

The US Dollar Index has reacted well at Fibonacci resistance at 97.80 levels. The drop might still not be enough to confirm new lows but it might have initiated already. At least it could be confirmed now that till prices remain below 98.20 levels, the US Dollar Index could continue to drift lower below 96.30 levels as well. Please note that the index has been consolidating since a while now before it met resistance at 97.80 yesterday and reversed lower. If this interpretation of waves is correct, we should see at least one low below 96.30 levels. Also, the index has been behaving differently against major currency pairs lately, adding further doubts to its near-term trend possibilities.

Trading plan:

Please exit short positions from yesterday and remain flat for now till further clarification on trend setups.

Fundamental outlook:

There are no major events lined up for the day.

Good luck!