I highlighted by green the zone which we have to break down to validate the head and shoulder pattern. (It's around 1277-78$) If we break it - and I'm convinced that the next attack will break it down- we will have time to decide what's happening.
Are we in the beginning of a new intermediate cycle?
Is it the 1st daily cycle of a new IC and we are heading down to the DCL?
Shall we calculate a target price for our shorts from the pattern?
Or just wait till price tags the 200 on the daily and we go long from that point?
Right now we don't know.
The commercial short positions just increased to a record high . Bulls do you really think that they will close their positions in a panic just a week after they 've increased their shorts?
I see a few comments below my posts that gold will rally because the dollar is collapsing. Normally I would say yes. But gold has decoupled from the dollar last week. We paid a high price for that. The same price will be paid on the opposite direction when gold will be weakening with the falling dollar. This will last for at least for a few days, while everything calms down after the poll.
Summary of last week on the chart:
The I was watching last week formed into a channel by last Thursday. We had a panic breakout on Thursday afternoon ( GMT ) but at the London tragedy we printed a daily key reversal and a 4 hrs chart key reversal also. That's a strong signal especially beacuse we turn down from the 200 weekly Moving average.
We must know when we can use the chart patterns and patterns in our strategy. Traders often see a pattern or a key reversal at the beginning of a trend. At that point they are not working. To trade successfully the chart patterns ( ) we need a prior trend or - at the key reversal - we need a where we can turn down from.
Now this is exactly the case. The key reversal is turning down from the 200 weekly MA and we have a 14 days prior trend to say we are printing a pattern which we can break down.
So Thursday in the afternoon price broke down the trending channel. On Friday bulls just continued the buying procedure as they did in the last days. "Price will rally again ..." But this time the shopping was enough only for testing back the channel (red ) . And Sunday night as the news came out with the new results regarding the poll / +3-4% stay/ bulls were not buying at the open and commercial shorts push down the price by 20 $ in 5 minutes.
The descending channel's are ready now (blue channel) : price can easily drop 40$ from here in this . And we might want to test the daily 100 at 1230$ or the daily 200 at 1210$ while stocks are rallying and the dollar & gold finds each other again.
So careful with those longs. We are in the 2nd phase of this bull market. The time of crazy rallies are over. This bull is older and much more tricky.
P.S.: I will post an interesting in a few minutes. :)
Next day it was erased "almost".
Do you have a De Ja Vu? ;)
Maybe it wants to break down at Yellen's testimony?
DUST, JDST will fly.
ANd Yellen haven't even talked ...
Are we heading to the DCL? ICL?
Maybe a half cycle low only....