Gold may be forming a triangle right shoulder on a small head and shoulders top before a mandatory retrace to 1250.
1250 is the VWAP level of the blue and red megaphones on the gold daily chart, which means it’s a critical decision level for gold. Gold could reverse there to breakout upwards through the neckline (silver) of a big inverse H&S bottom for the correction out of the 2011 high (purple scenario).
But gold has just spent months forming a top at the orange megaphone VWAP. That would usually mean at least a trip to the bottom of the orange megaphone and often a downwards breakout from it.
A trip to the bottom of the orange megaphone would target at least 1000 and usually some small break of 1000. Gold would have to put in a retrace to the blue megaphone VWAP at 1250 before it was legal for a big move lower than that. A downwards breakout from the orange megaphone would target roughly 700.