Gold has made a breakout, a double bottom and then spiked out the previous high. All of these things are consistent with a butterfly pattern and that puts us at the major inflection point now.
A few points to note about a butterfly in this type of setup.
1 - We should complete by around the 220 fib. If this pattern is working, we should be due to turn now.
2 - Failure of the pattern produced strong counter-moves a lot of the time. Stops should be tight in this type of pattern.
3 - If the range based butterfly works, we typically see a strong move to the 220 fib. This is around $1,200 in gold.
Our previous close on the daily is a bearish engulfing pattern. This would typically be the high made in a successful butterfly. Taking large gold shorts here with my stops very close to the previous high. High RR spot, and I think we've got reasonable odds of this working out. Unless there's to be a strong break of the downtrend, this is likely the start of the short.
A few points to note about a butterfly in this type of setup.
1 - We should complete by around the 220 fib. If this pattern is working, we should be due to turn now.
2 - Failure of the pattern produced strong counter-moves a lot of the time. Stops should be tight in this type of pattern.
3 - If the range based butterfly works, we typically see a strong move to the 220 fib. This is around $1,200 in gold.
Our previous close on the daily is a bearish engulfing pattern. This would typically be the high made in a successful butterfly. Taking large gold shorts here with my stops very close to the previous high. High RR spot, and I think we've got reasonable odds of this working out. Unless there's to be a strong break of the downtrend, this is likely the start of the short.