Gold Head And Shoulders
Trader Moe | Aug 22, 2016 11:02AM ET
Gold Head and Shoulders with Right Shoulder Triangle vs Gold Continuation Triangle
Gold is working on a potential right shoulder triangle for a head and shoulders top (red neckline above). It broke out downwards overnight from an interior triangle (blue) and is now working its way down a price channel to the red neckline.
Here’s a close-up of the price channel on a 5-minute chart:
Gold Price Channel Close-Up on 5-Minute Chart
The price channel just completed its critical decision wave and bounced too far back to the channel top for it to be likely to set up a fast move down. Instead gold is likely to continue zigzagging its way to the neckline (or a new, lower neckline at roughly 1300).
Gold Confusion on Daily
The gold daily chart is a mass of confusion. Gold is clearly working on a bottom, but it’s likely gotten ahead of itself–you see this a lot in bottoms after a bubble move.
Gold believes it’s already broken out of an inverse H&S (red neckline) but that’s unlikely. If it is going to break out from an inverse H&S bottom, it is likely setting up the neckline now. In that case, it will likely complete the H&S in the top chart and then break down to at least the orange megaphone VWAP for a quick right shoulder. A breakout from that inverse H&S would likely lead to the big move up gold bugs are hoping for.
But gold is more likely working on a megaphone bottom (blue) that will take it to a new low.
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