Monday, 8 July 2013

Chart patterns in gold : head and shoulders, pennant - current progress; last chance saloon. 2013-07-08 0200 BST

We had a nice little rally in gold on Monday, more or less back to the stubborn blue resistance line that I drew on charts on recent posts below.

This was my weekend chart that I didn't post due to going strawberry picking with my beat friends and their lovely kids on Saturday:

The last chance saloon was to have a rally and have a right shoulder form under the rsistance, then to break through the resistance.

So where are we as of Monday night?

Well, look below. Gold rallied almost right up to the resistance on Monday, just as I drew it above.

However, I had my pessimistic hat on, because the price did not break out above the CRUCIAL blue resistance line. I then noticed that there is another head and shoulders, marked in red, that could send the price the other way if it breaks down. See below:

This includes the downtrend channel that is delineated by the blue resistance and a parallel line starting at the April $321 bottom. Right no, that lower line stands at $980, so in the event of a quick failure of price, that is a good target to watch.

I would also consider that, if this downtrend were to continue for abother 11 weeks (it is 11 weeks old so far), the target of the bottom of the trendline (the one that goes off the bottom of the above chart) would be $980-(1321-980)= $640, somewhere near the October 2008 crash low.


No comments: