Once we fell out of the , it happened with strength and . Fortunately GOLD stopped where it should, the top $1200s. This zone was the chop from the flag prior to the local top and naturally got a fair amount of strength to it. It’s likely we will flag around the orange zone and down to $1280 based on the fact the flag prior to the local top lasted 30days.
This price action have possibly created the well-known pattern . We had a flag before breaking $1300 acting as the first shoulder, a rally up to $1340 as the head, then a dump down to $1280, the neckline, and we’re now flagging as the second shoulder below $1300.
If you think this setup will play out, I would place a short SL above $1307 to be stopped out ABOVE a local level, and not below it. The potential risk/reward rate is very good if we close this daily candle below $1300.
The orange zone marked have a history of being a point of decision and indecision. This is basically a zone well respected by chartists and traders, and is naturally a turn point for the price action. Several pumps and dumps have ended up inside this orange zone and immediately reversed. This didn’t happen this time, making me think we could have more downside coming.
There’s a certain possibility of GOLD continuing up, so you shouldn’t risk all your cards on the playing out. In case we continue up, I’m looking to close some longs and re-add to my shorts inside the red zone. If the pattern plays out, I will take profit inside the green boxes, and move my SL down manually, trailing the price. My plan is to re-add to my longs around $1210.
That’s it for now! Feel free to share your opinion in the comment section or ask me any question you’d like! Goodbye for now :]
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