Gold price made a fake break down yesterday and reversed higher above $1,290 breaking the downward sloping short-term trend channel. Gold price touched the lower boundaries of the downward sloping channel breaking $1,275 and reversed above the channel. Breaking below $1,275 has increased chances that wave 2 was completed at $1,331 but the reversal above $1,290 has changed our possible wave counts once again, as the decline with the new low could very well be an irregular wave B.

While price is reversing upwards we find short-term resistance at $1,300 by the Ichimoku cloud. Support is found at $1,270. Current price action has increased the chances of a bigger bounce towards $1,300-$1,315. If price bounces upwards above $1,310 then we will have increased chances of making a move above recent high at $1,331.

Gold price has briefly broken support as shown in the chart above but reversed and closed the day above support. This fake break down could be the signal for the start of a new upward move that could bring prices above $1,331 towards $1,340-50. Breaking below $1,269 is bearish but I give little chances of this happening. If wave 2 is not the $1,331 high, then we should expect wave 2 to complete near $1,340-50. This is where we should sell with $1,391 stop and $1,200-$1,100 target.