Gold price bounced as expected from 38% Fibonacci retracement level. The price is now challenging the recent highs and could provide one more new higher high towards $1,260 if we manage to break above the resistance at $1,250.50.
- Red rectangles - resistance areas
- Green rectangle - major short-term support
- Blue rectangle- target if green rectangle fails to hold
- Blue line - short-term trend line support
- Green line - major trend line support
Gold price continues to make higher highs and higher lows. Last week's lows are a very important short-term support. If they are broken, I expect gold price to move towards $1,225 and test the major trend line support. Gold is about to break above the recent highs at $1,250. This could lead to a move towards $1,260. However I do not believe it is risk worthy to be buying gold now as I see the entire move higher from $1,196 is about to end around $1,260 which was our longer-term target once we broke above $1,200 back in October.
Bulls need to be very cautious now. The trend continues to be bullish but I believe the precious metal will need to make a bigger pullback once it completes the move from $1,196, around $1,260. The $1,260 area is a very important resistance area and I believe gold will stop the uptrend around that area.