The XAU/USD pair (Gold vs. the American dollar) ended yesterday's session higher than opening after two consecutive days of losses. Yesterday, the pair traded as high as $1263.49 an ounce as uncertainty in the U.S. and European equities increased desire for the relative safety of gold. It looks like some investors expect the major stock markets to take a breather from their recent advances.
Although prices are moving inside the Ichimoku cloud on the 4-hour time frame, we have a bullish Tenkan-Sen (nine-period moving average, red line) - Kijun-Sen (twenty six-day moving average, green line) cross on the same chart. I think this outlook, combined with yesterday's candle which engulfed the previous candle, indicates that higher prices will come in the short-term.
In other words, if the bulls manage to defend the 1256 level and break yesterday's high, they might have a chance to test the resistance at 1268. Closing above this level would be necessary in order to gain enough traction to tackle 1277. However, if the bulls run out gas and prices drop back below the 1256 level, expect to see some support in the 1251/48 zone. The bears will have to capture the strategic fort at 1240 to find the extra strength they need to visit the 1235 level.
