Gold Needs A Right Shoulder
Trader Moe | May 31, 2016 10:45AM ET
Gold is Forming a Head and Shoulders at 1200 Before a Right Shoulder Attempt on its Potential Inverse H&S
Gold is back at 1200 at the neckline of its potential H&S at VWAP of the big pink megaphone.
Gold needs at least a pullback to the blue megaphone VWAP. That pullback would put a larger potential inverse head and shoulders (red neckline) on the daily chart.
However, gold has now been working on its H&S top for 3 1/2 months. That’s a very long time to work on a top before a simple right shoulder dip. Usually such a protracted top would mean that the inverse H&S right shoulder is going to fail and the big inverse H&S is going to break out downwards (purple scenario) with a target of roughly 750-800.
Another thing you have to watch out for is a megaphone right shoulder on the H&S with a neckline at 1200. A megaphone right shoulder would usually mean a squeaker new high before a larger H&S completes and breaks out downwards.
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