FX.co ★ Gold Elliott wave analysis for August 20, 2013

Gold pulls back down towards 1,350.00 as expected after reaching 1,383.00 and touching the upper boundaries of the trend channel as shown yesterday. The first short term support at 1,366.00 was broken and that confirmed our view that prices were heading towards the lower boundaries of the upward sloping channel.

Prices are expected to find support at the 1,350.00 price area and if that support fails, then 1,340.00 will be an important test area where prices will back test the broken trend line on a daily level. This back test could re-energise bullish momentum towards 1,400.00.

So prices are falling from 1,382.00 as expected. What now? We expect prices to continue lower as long as Gold trades below 1,370.00. We believe that 1,340.00 will be achieved and bears should use 1,370.00 as stop. On the other hand, bulls should have closed their positions when we warned about the pull back. If neutral and want to enter long, you should wait for 1,340-45.00 price area.