Gold (XAU/USD) bounced at the support trend line (blue) and shallow Fibonacci level of wave 4 vs 3 before breaking above two strong resistance trend lines (dotted red). The bullish breakout and continuation however is now facing a new key bounce or break spot at $1320.
XAU/USD bullish price action is probably a wave 5 (green) within wave A (blue). A strong bearish bounce at the Fibonacci targets could indicate the end of wave A and the start of a bearish correction within wave B.
XAU/USD could also be completing a wave C (purple) rather than a wave A (blue – 4 hour chart) at the 78.6% Fibonacci retracement level. A bearish reversal that takes price back down below the support zone at $1250 favours the ABC (purple) wave pattern which is mentioned on the daily chart. An ABC (purple) pattern might complete the wave D (pink) but a break above the 100% Fib resistance at around $1366 invalidates the triangle ABCDE (pink) chart pattern.