On daily chart of the GOLD two important price action formations have emerged that may indicate a potential reversal. On Tuesday current minima was established, while price during the next session fluctuated in range of the previous day so an Inside Bar (IB) was formed.
On the other hand, yesterday, within the range of IB formation was formed a formation of Outside Bar (OB), where the candle engulfs both with range and candle body the previous day candle (10.05.2017). During today’s session, price is rising and it is already above Tuesday’s peak, which can mean a breakout from the Inside Bar and confirms direction of move in line with the bull’s Outside Bars.
Bearing in mind the above, further increases are expected as a correction to recent declines. For confirmation, however, you can wait until the end of the session / week to make sure that the breakout from Inside Bar was not false. Potential upward movement should lead to a resistance zone around 1255. This area is currently crossing 20 day SMA, but it also represents a 50% abolition of recent declines.
Alternatively return to declines and seting new minima would open the way for a re-test of key support near 1197.00.