Earlier in London, gold prices initially rallied following reports of explosions at Zaventem airport in Brussels. An hour later explosions occurred at metro stations and gold prices continued to climb higher. The flight to safety trade saw gold rally over 1.0% toward a session high of $1,260.90, but the rally stalled and returned back to pre-attack levels.
Since making a fresh 1-year at the $1,287.80 level, the yellow metal has consolidated and choppily made lower highs. If the major $1,290 resistance level is respected for the rest of the week, we could see price consolidate and target the $1,226 level. If we see further downward pressure, price may eventually find support from the $1,213 level. It is around that area that price could form a potential bullish Gartley pattern. Point D is targeted with the 78.6% Fibonacci retracement of the X to A leg and the 127.2% Fibonacci expansion level of the B to C move.
If the pattern is invalidated, deeper support may target the psychological $1,200 handle.
The trade: Sell Gold at $1,255 with a stop loss at $1,265 and a take profit at $1,235. The Risk/Reward Ratio is approximately1:2