Gold is trading in a complex pattern in nearly a $10 range for the past several days, awaiting direction from the FOMC decision and other important economic releases due this week. We have been able to trade it for a maximum profit of $5/ contract, but the risk reward has not been favorable.
The primary view on gold has not changed and 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. See here for a medium-term view.
Gold Daily Chart - July 27, 2016
As stated in yesterday's article, the diagonal trend line held, pushing gold now towards higher levels in a movement which appears to have more momentum and trend-like features. With the Fed Funds Futures at very low levels, a surprise in today's decision is unlikely, thus gold might get the fuel to complete its corrective up-move in wave C. Target for wave C is at 100% extension of wave A, $1335.
For the bigger picture to remain clear (bearish scenario), it is important that $1342 or even $1340 is not touched in a rally. Any long positions initiated at this level should be protected with a stop loss at $1323.
Gold 1H Chart - July 27, 2016
