Gold traded sharply lower last night as news of a potential resolution to the "debt ceiling" in the US filtered through. Gold is still firmly entrenched in the down trend channel that has contained the price since the 1434 top and is approaching critical support in the 1272-1277 area.
To illustrate how critical this area is for gold, a break of this zone will suggest a return to 1180 in the short term and have potentially grave consequences for gold in the longer term, as it would go a long way to confirming our "bearish" Elliot Wave count with a downside target of 1000-1050.
However a bounce off this area and move higher, breaking out of the down trend channel, would suggest a "double bottom" at the 61.8% retracement level and set the market up for a strong rally back towards 1500.
The dollar has found support around 80 and the resolution of US Government difficulties can only be positive for the dollar. Equities remain strong and a resumption of the rally in stocks would put more pressure on gold.
There is little in the way of data released today, so we may see quiet trading into the weekend, barring a break of 1272-1277.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.
To illustrate how critical this area is for gold, a break of this zone will suggest a return to 1180 in the short term and have potentially grave consequences for gold in the longer term, as it would go a long way to confirming our "bearish" Elliot Wave count with a downside target of 1000-1050.
However a bounce off this area and move higher, breaking out of the down trend channel, would suggest a "double bottom" at the 61.8% retracement level and set the market up for a strong rally back towards 1500.
The dollar has found support around 80 and the resolution of US Government difficulties can only be positive for the dollar. Equities remain strong and a resumption of the rally in stocks would put more pressure on gold.
There is little in the way of data released today, so we may see quiet trading into the weekend, barring a break of 1272-1277.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.