The chart shows the bearish trend continuing as Gold sharply moved lower to test a medium term bearish support line (point 1 on chart) which it has just broken below, after recently failing to hold a short term bullish support line (point 2 on chart) and failing to break-out of a steeper bearish channel (point 3 on chart).
As Gold tests this medium term support line (point 1) we can see that a failure of this line and a close below would mean a break through of the predominant bearish channel overall (point 4).
However, it could find support as it has before on this line and bounce back with a potential bullish continuation (point 5) which is plotted using the degree or slope of recent historical bullish reverses on this medium term support line (point 1).
Therefore, unless there is a bounce and considering the bearish momentum of the medium and short term channels, any failure to find support at current levels and on the medium term bearish support line (point 1) could enable a continued descent where Gold may look for support around the lower-end of the steep bearish channel which is noted as a potential bearish continuation (point 3).
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @1301.45 with a Limit to take profit @ 1339.55 and a stop-loss to cut losses @ 1269.00 Risk/Reward Summary: Limit risk = +38.1 points profit / (-32.45) points Stop-loss risk = Gain to Loss ratio = 1.17
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1259.00, with a Limit to take profit @ 1162.00 and a stop-loss to cut losses @ 1305.00 Risk/Reward Summary: Limit risk = +97 point profit / (-47) Stop-loss risk = Gain to Loss Ratio = 2.07