On Friday, gold price broke the triangle formation we mentioned last week and moved closer to our target area of $1,050-40. Gold is oversold sending bullish divergence signals and a bounce towards at least $1,105 is expected.

Blue line - bullish divergence

Gold price remains below the Ichimoku cloud in the 4-hour chart. Triangles usually precede the last move of a trend. Stochastics have not reached a new low as the price did and this provides a bullish divergence. Gold price is expected to bounce towards at least $1,105 where the 38% Fibonacci retracement is observed.

Yellow line - long-term resistance

Red lines - bullish wedge

The weekly chart shows us how the price has approached the lower wedge boundaries. Stochastic is also at oversold levels. Each time stochastic reaches these levels in the weekly chart, a strong bounce follows. That is why I'm saying that this is not the time to be short or sell gold.