Gold held its support levels on Friday and was trying to make an upward break. As mentioned in previous post, first target at $1,294 was achieved. Next target is at $1,340. It seems the prices are moving upwards in an impulsive pattern, which most probably is wave C of the upward corrective move that started at $1,208.

We expect wave 5 of wave C to complete near our $1,340 target. Support is found at $1,266 and as long as prices trade above that level, it is very possible to reach the upper boundaries of the channel as shown in the chart above. Breaking the $1,266 support, the wave count will have been completed with a truncated 5th wave at $1,289 and in the long term downward trend will be resuming.

As shown in the 1 hour chart above the wave count is inclomplete. Support is held and the upward trend line, the first support level is not broken. Breaking below $1,280 will not be something good for bulls, but the important level for this wave count remains at $1,266. We are cautiously bullish as we believe that eventually prices will break above $1,290/98 resistance area and head towards $1,340. Stop for bulls is the $1,266 low.