Anyways, take a look at the weekly chart above. As you can see, gold has made a higher high (HH) at 1303 but then followed by a lower low (LL) at 1200. Therefore, unless gold makes another higher high (HH) > 1303, this monster will have to go down. This is very simple . Plus already has had a cross over, another good technical indicator.
BUT, where we will short ?
The left structure shows that 1285-1290 may provide strong resistance. Plus the green downtrend line will also act as major resistance. This is the same downtrend line as in the monthly chart. (See the related post and chart).
I am going to look for some kind of reversal pattern when gold reaches that price range 1285-1290. Once I find signals that gold is going to run out of steam in that price range, I will place a sell order with stop loss @1305 and take profit @1180. If gold breaks 1303, it will make a higher high so this trade will be stopped.
Gold has not reached 1285-1290 yet, but it will likely do. I know there is a downtrend line @1265 on the still I think gold is going to make a fake break out of that downtrend line, which would make everyone think it's going to break 1300 and going much higher but then it will suddenly turn down. The FOMC next week can be a game changer. Even if Fed does not raise rate, I think gold is pretty much priced in that idea. Like they always said "buy the rumor, sell the fact".
So this is just a plan. I am going to watch the price action and will make a call. So stay tuned for part 2.
The reasons are:
- The top of the left is around 1285
- Big red candle around 1285-1290 after gold reached 1303 and started going down. Price tested again but failed. This was a true break out to the downside 1200.
- Price has reached Fibo Retrace Level 78.6%
- Price has reached monthly downtrend line and not able to push over it.
- ab = cd pattern on 4hr chart.
If we assume this impulse wave as a corrected (B) then wave (B) will not retrace more than 78.6% to 88.6% of wave (A).
I will add another short position if price reaches @1292. All stop loss are above 1303.