Waiting for GOLD to Form a Head & Shoulders Pattern Before ShortAs you can see from this Daily chart, Gold has been in a short/medium term bull trend recently.
This bulltrend could potentially be running out of steam here - as you can see from the Fibonacci I have applied to the bear trend before it, Gold has now reached its 61% retracement area.
It pulled back from the 61% Fibonacci area (around $1255~) quite rapidly and it wasnt for the close of the last daily candle being quite bullish (a hammer) I would have been short first thing Monday.
However because Gold managed to pull back right at the end of the day (if you check the 4hourly you will see it only pulled back in the last 4 hours of trading), meaning the body of the daily candle did actually close above the outer trendline - as you can see on the chart.
This gives me a feeling Gold will pullback up slightly, hitting the Resistance of the left shoulder (blue dotted line) forming a right shoulder, indicating the end of the recent bull trend/start of its next leg down.
If Gold does form a head and shoulders pattern, I will be looking for a daily close below the Outer Trendline to enter short.
Probably with an inital target of $1225 or the next blue dotted line of support - but I do belive $1200 and below would not be far behind once these levels have been breached!
We will have to wait and see what the price action does, remember anything can happen in the market!
Will update more next week.
