The primary view on gold has not changed. This is a daily complementary analysis for shorter-term trades.
Gold is entering into a deeper correction which initially targets 23.6% retracement of the 2016 rally and lower levels later on.
Gold Daily Chart - July 25, 2016
The down wave (expected to be wave A) is complicated, and it is not clear yet whether will it be of an a-b-c form or an impulsive one. Price action from Brexit up to now has formed a head and shoulders, and the neckline is being tested for the third time.
However, divergence in AO is the key factor which indicates gold is due for a rally. Starting from July 12 when price hit $1335.6, AO hit a record low for this period. Even though in the subsequent days gold slipped lower, AO made higher lows. When the same thing happened on July 20, gold rallied more than $10, failing at SMA 200.
Gold 1H Chart - July 25, 2016
We will enter long in current levels ($1325) with a target at the green channel and SMA200. Stop loss for this long is below the neckline, however we will be vigilant on this position as it is important to note how price will react at SMA 200 or the neckline.