Gold Nears Head-And-Shoulders Neckline
Trader Moe | Aug 24, 2016 01:11PM ET
Gold is Approaching Its Head and Shoulders Neckline (Red)
Gold is approaching its head-and-shoulders neckline or potential triangle bottom (red).
It could bounce off that neckline to complete a triangle before one final pop to 1400 (purple scenario). Or it could just break out downwards through it in a quick collapse to 1200 (pink scenario).
Gold Inverse H&S vs Triangle on the Daily Chart
Or it could continue to triangle (green scenario in top chart) to put a right shoulder triangle on the H&S. That would almost always mean a breakout downwards.
Once gold breaks out through that red H&S neckline in any of the scenarios, the minimum target is 1200. Gold could form a fast bottom there to put a right shoulder on a big inverse H&S on the daily chart (orange scenario above).
Or gold could start megaphoning across 1200 and just keep adding megaphones inside megaphones to form a giant triangle on the daily. That triangle could break out in either direction but would be roughly a 60-65% favorite to break out downwards to 700ish.
Gold Could Also Plunge Through 1200 to its Blue Megaphone Bottom
Gold could also plunge right through 1200 to the bottom of the big blue megaphone on the daily, or plunge through after a bounce there.
The longer gold spends topping up here, either with a pop to 1400 to form a bigger H&S, or with a triangle right shoulder on the existing H&S, the more likely the next move will be to the blue megaphone bottom.
A plunge right here through the red H&S neckline would be more likely to reverse at 1200 or get bogged down there in a series of megaphones inside megaphones.
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