Gold XAUUSD Continuation pattern now complete, downtrend resumesGold XAUUSD
Got slung back in the slammer again - this time for 3 painful days, for uploading a pretty Bitcoin chart without actually changing the chart - because it didn't need changing - but that's another rule broken and the mediators show no mercy to the old and ignorant. So do you remember how messed up Steve McQueen looked when he finally got out of solitary in Papillon ? Not good.
This update below was written on Saturday for the week ahead and is sent out to a couple of hedge funds but may be of interest here too. Sorry for ban and therefore delay in upload - some of this has already played out but the patterns are so beautiful and true. The lower small parallel of the continuation pattern has become resistance in perfect text book fashion, too. Just a really nice chart at moment. Enjoy.
Gold
Having broken below the last support at 1261-1260 gold has
since fallen away to a low at 1244, finding support from the
lower parallels of the ensuing impulse wave that then
developed over the course of the week.
With DXY reaching towards the upper limits of its likely
near term rally gold is finding support and making a
continuation pattern within the larger down-wave - it's
also made a near term pin/spike double bottom,
effectively at 1244 with the spike low almost 1 full point
lower, taking out as many bear stops placed too tight to
the first low before whipsawing to 1252 - price action on
the last day of the week very similar to DXY exactly a
week before (double bottom/surprise to market, leading
to rush to close shorts now on wrong side of the counter
rally...same here a week later.
Gold is a near term buy on dips back to the lower smaller parallel (if it loses that line it should drop back to 1244.03 at lowest in very near term and then bounce again). It should then push higher towards the lower parallel - there are two sets here, making it difficult to judge which has ultimate power here - both have 3 strikes, too. The impulse wave has a wobble either side, but it's a controlled wobble (by the competing parallel), nevertheless. So it can get stuck under the lower parallel for a while but is likely at some point to push through and then test the upper parallel where it becomes a sell in 1251.5 -1252.4 range with a stop above 1253.
If at any point during the week gold can manage to break above the upper parallel and then beat 1253 it would be likely to create a lot more short covering, including us, forcing price back as high as 1260-1261.17 range before falling away again. This break, if we see it at any point, will need confirming by DXY breaking down further again. But as things stand and unless chart tells us otherwise gold should fall away from the big parallels one more time when it gets there. That spike either side up and down on Friday shows uncertainty/indecision leading to whipsaw. There will likely be more of the same from 1250.64 up to 1252.17 range this week too - any test of the upper limit here is a sell with stops just 15-20 pips higher for small loss if wrong, and no higher than 1253 . Plan B: If this is proved wrong and at any point 1253 is exceeded look to reverse any shorts for a quick counter rally to 1260-1261.17 range and then reverse short again with stops above 1263.
Returning to the downside, so far this little rally is just continuation within a newly forming downtrend. For that to remain this way the upper parallel must hold back price later on Monday when tested...A break of the lower small ascending parallel on chart will then tip gold back into the hands of the bears again - can short aggressively again now or add at that point looking for a test of the lower parallel later in the week (close shorts here) and at some point further out a decline to 1206-3 range
