XAUUSD: Has it topped on these Head and Shoulders?

XAUUSD broke under the 4H MA50 last week for the first time this year. It did so on four different 4H candles but all closed back above the 4H MA50, indicating that the long term bullish sentiment isn't easily shaken off. Technically 4H is neutral now (RSI = 49.050, MACD = 1.020, ADX = 23.949) with the RSI on its January S1.

The pattern however which for the first time prompts to a top formation on Gold is the Head and Shoulders that was completed last week. This has high probabilities to reverse the bullish trend, at least on the medium term, taking also into account that the RSI has been dropping all this time while the price was rising.

However we will follow certain conditions. A closing below the 4H MA50 is the sell trigger to look for, which can target the S1 bottom (1,911.50). Under this we expect contact with the top of S2 (1,898) and under the bottom of S2 (1,891) we look towards the final bearish target on S3, where the 4H MA200 is trending to.

In the same way, the condition that extends the long term bullish trend is for the price to break 1,943 which is the neckline of the Head and Shoulders patterns, hence our invalidation level. The extension should target 1,960.



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