Long term perspective on GOLD / Cup and Handle Pattern

COMEX:GC1!   Gold Futures
Today we will share our view about the long-term opportunities we think gold is about to offer. First, we will start with the Weekly chart you can see on this post:

What is a Cup and Handle Pattern?

-Cup and handle pattern is the name that someone really creative gave to a market situation in which we have an ATH followed by a big Dip, in this case, a major correction between 40% to 70%. Then the price is able to recover the whole drawdown, and we have a fresh ATH (this can be above the previous one or a small breakout above). Finally, we have a corrective pattern, typically a ZIG-ZAG structure or an ABC structure. After the ZIG-ZAG / Flag Pattern breakout, we have the confirmation signal of a new Bull run about to come.

-To better understand this example, you can see the next picture, and also you can see the situation from 1978 to 2009 (cup and handle pattern) / 2009 to 2011 the resolution of the structure.

-Please understand that this type of pattern is useful on high timeframes like Daily and Weekly charts, its pretty similar to the situation we had on BTC/USD several times after huge corrections

-With that explained, we think GOLD is about to complete the pattern. Right now, our objective is not to find the bottom of the movement but to be ready to execute positions if the breakout of the structure is confirmed.

Lets take a better look to the current situation on the Daily Chart:

This chart shows that the 1680 - 1700 area is a major zone for bullish pressure to start coming. Why? From a technical perspective, we can observe a huge support zone that + Ascending trendline + the channel's cloned trendline. Remember that using different tools that converge on a specific area is a strong signal in technical analysis.

Our Strategy right now is:

Wait for the price to reach the expected area 1680 -1700. Once that happens, we want to see the first bearish trendline's breakout and look for a corrective structure. That would be the first position we can develop on the yellow lines, this would be a risky setup because we are not waiting for the absolute confirmation of the cup and handle pattern (breakout above B), but if we are right, we can have a huge risk-reward ratio trading waiting patiently for the Cup and handle target.

The second position we want to develop is the safer one, which is waiting for the ZIG-ZAG pattern breakout and looking for a corrective structure on the next resistance zone. If that happens, we will develop long setups, as you can see on the yellow lines towards the final Cup and Handle Target.

We hope the information is useful. Thanks for reading!


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