In June I warned of the potential downside break of a descending triangle in spot gold. In April that has finally come to pass. Even though there has been a huge fall after breaking down through the 1525 level I'd be surprised if it's all over yet. There's been a strong rally off the 1300 level but it smells of a dead cat bounce to me. Just how far this rally goes I'm not certain. Potential exists for the market to test the breakout at 1525 but the rally has already been quite big. As long as the rally stops at 1525 or lower I believe we will see a retest of recent 1300 lows and a break of that further down to at least 1250.The 1250 level would be the width of the rectangle within the Gold triangle ( 1800 to 1525 or 275 points) from the 1525 That would be the minimum I'd expect.
If we accept that the larger descending triangle is valid then the downside target is more like $1120 ( give or take a few dollars). Again that is the minimum downside count from a descending triangle. It could go lower but you'd look at taking profit there if still short.
Only a close above about 1530 would have me thinking the targets have failed. Silver has a similarly bearish count and I would be surprised if I didn't see $16 before this correction is over.
Bear in mind I'm not a financial advisor so talk to one of those before making any trading decisions.
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