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Gold price has managed to reach $1,280 and is showing signs of weakness at the start of this week. A pullback towards $1,260-65 is justified as price is close to important channel resistance.
Blue lines = price channel
Gold price remains inside the short-term upward sloping channel that started at $1,160. The price channel shows that we have reached a short-term trend resistance level and that is why Gold price is pulling back lower. The pullback could reach $1,260 before the uptrend resumes higher towards $1,300.
Blue line = trend line resistance
On the weekly chart above, I observe two important things. The downward sloping trend line from $1,800 has been broken. The Ichimoku cloud is still above the current price but it is thin, thus vulnerable. At the same area where the Ichimoku cloud is, we find the 61.8% retracement of the decline from $1,393. If we clear above the Ichimoku cloud and the 61.8% retracement resistance at $1,292, then we could see the upward move extend towards the 38% retracement of the decline from $1,800.
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