Gold price broke below the support at $1,318 yesterday and reached our next target of $1,311. Gold price has made a completed 5 wave move downwards after making an extension of the third wave. Yesterday, we were wrong in thinking the decline was over, but with the new low, there is increased chance now that we see a considerable upward bounce before the next big move down.

In the chart above, we show our preferred elliott wave count. The downward price movement is inside the downward sloping channel as show above and a breakout of this channel will confirm that the downward move from $1,391 is over. Short-term resistance is found at $1,318-25 and short-term support at $1,305-$1,300. The first target of this upward bounce we expect is the 38% Fibonacci retracement near $1,340 and then the 50% retracement.

The daily chart is bearish as Gold price has broken below and out of the upward sloping trend channel from $1,180. Price has also reached the 38% retracement and this justifies an upward bounce soon. The entire upward move from $1,180 is most probably over in our opinion and bulls should be very cautious as this could mean that the entire upward move is over, Important long-term support that should hold if we are going to see higher than $1,391 is the support levels at $1,290 and $1,260. For now we prefer to wait for the upward bounce to complete and then we will decide if it is a sell opportunity. To turn back bullish, we will need to see 5 waves up.