06.08.201312:34 Forex Analysis & Reviews: Gold Elliott wave analysis for August 6th 2013

Gold fell once again below 1300 confirming our bearish view that our primary wave count is the bearish one. The price could not manage to break above the level of 1325, which is short term resistance and our bearish view remains intact. 1290 is the first support level that could make Gold prices bounce up again towards 1300. The back test of the broken upward channel as shown in the daily chart  below is confirmed and supporting bearish trend.

We should not forget that the bullish alternative is still possible because we are currently inside wave 4. This wave count will be cancelled when the price breaks below 1266 (overlap of alternative wave 1 high). However this bullish scenario has another drawback. Alternative wave 4 is too much bigger than alternative wave 2 relative to time it took for both waves to unfold. Another bad sign for the bullish alternative is the fact that the upward trend channel is broken. That is why our primary choice is that the correction from 1180 is over at 1348 and we are starting a new downward wave.

Short term support is found at 1290 and then at 1280 lows. If it is broken we will test 1260. On the other hand bulls will want to break above 1325 resistance and 1339. Concluding we remain short biased with longer term target 1200 and stop at 1349. Short term traders could use 1325 as stop and target 1270.