Gold showing signs of potential drop
Hi guys,
Thanks for taking the time to read this analysis. Taking a look at the Gold chart, we can see a few signs of potential downside to come over the next couple of weeks.
On the right hand side we have the weekly view of this chart and you can see the price has reached resistance at 2 major trend lines.
The first major trend line is the descending trend line that extends from August 2011 to present time. Each major peak up to this trend line since that time has found strong resistance and price has gone back down.
The other major trend line is the ascending trend line that is formed from December 2015 to December 2016 to present time. The price is also hitting resistance at this trend line.
Finally we see the 0.786 Fib level providing additional resistance.
The indicators are showing signs of reversal as well. One of my favorite top and bottom indicators is the RSI exhaustion indicator. When the line shows green for some time it is showing there is bullish exhaustion and as soon as the green disappears and price starts to fall, it almost always falls down afterwards. Additionally, the Sentiment Index is showing it has already hit a peak. This doesn’t mean it can’t go back up, however we typically see some sort of drop soon after the peak is formed.
On the left hand side of the chart we have the 12 hour view. Here we see price is forming a symmetrical triangle at the top and this is typically a pattern showing indecision.
Looking at the indicators, we can see bearish divergences occurring on the RSI, the Sentiment Index, and the CMF.
All 3 indicators are showing loss of bullish momentum and gaining bearish momentum which could help provide clues as to which direction this triangle will break.
If price does break to the downside, my 1st target to take profit is at the 0.236 fib level with my 2nd target at the 0.382 fib level. This 0.382 fib level on this chart corresponds to the 0.618 fib level on the weekly chart and is an area I will be looking for reversal. Stop loss is placed 10 pips above the highest candle wick of the symmetrical triangle formation in case of stop loss hunting.
If you found this analysis useful, please give it a thumbs up. Thanks!
Thanks for taking the time to read this analysis. Taking a look at the Gold chart, we can see a few signs of potential downside to come over the next couple of weeks.
On the right hand side we have the weekly view of this chart and you can see the price has reached resistance at 2 major trend lines.
The first major trend line is the descending trend line that extends from August 2011 to present time. Each major peak up to this trend line since that time has found strong resistance and price has gone back down.
The other major trend line is the ascending trend line that is formed from December 2015 to December 2016 to present time. The price is also hitting resistance at this trend line.
Finally we see the 0.786 Fib level providing additional resistance.
The indicators are showing signs of reversal as well. One of my favorite top and bottom indicators is the RSI exhaustion indicator. When the line shows green for some time it is showing there is bullish exhaustion and as soon as the green disappears and price starts to fall, it almost always falls down afterwards. Additionally, the Sentiment Index is showing it has already hit a peak. This doesn’t mean it can’t go back up, however we typically see some sort of drop soon after the peak is formed.
On the left hand side of the chart we have the 12 hour view. Here we see price is forming a symmetrical triangle at the top and this is typically a pattern showing indecision.
Looking at the indicators, we can see bearish divergences occurring on the RSI, the Sentiment Index, and the CMF.
All 3 indicators are showing loss of bullish momentum and gaining bearish momentum which could help provide clues as to which direction this triangle will break.
If price does break to the downside, my 1st target to take profit is at the 0.236 fib level with my 2nd target at the 0.382 fib level. This 0.382 fib level on this chart corresponds to the 0.618 fib level on the weekly chart and is an area I will be looking for reversal. Stop loss is placed 10 pips above the highest candle wick of the symmetrical triangle formation in case of stop loss hunting.
If you found this analysis useful, please give it a thumbs up. Thanks!
Comment:
Finally we got the drop! This trade is looking good now, but let's keep our eye on all time frames and make sure this doesn't jump right back up.
Comment:
Update on Gold
Today we saw a strong bounce off the rising black trend line which has been formed by all reaction lows from November 2018 to present time. Not surprised by the jump as the price has been held up by this trend line for awhile and we are still in a strong bull trend. I have moved my stop loss down to above this spike so if we move up from here I can secure some profits. Because of the strong reversal signals on daily time frames, I am keeping this short open in case we see a drop below this rising black trend line. If I notice any buy signals coming in on the daily time frame, I will reconsider my position.
Today we saw a strong bounce off the rising black trend line which has been formed by all reaction lows from November 2018 to present time. Not surprised by the jump as the price has been held up by this trend line for awhile and we are still in a strong bull trend. I have moved my stop loss down to above this spike so if we move up from here I can secure some profits. Because of the strong reversal signals on daily time frames, I am keeping this short open in case we see a drop below this rising black trend line. If I notice any buy signals coming in on the daily time frame, I will reconsider my position.
Trade closed: stop reached:
So that rising trend line held the price up and we got a big bullish move before the weekend. The targets for this trade were not reached however I still took profit from moving my stop down. I'll post a new gold idea soon