Gold Bottoming for Swing to Top of Big Falling Wedge

Gold has Formed a Megaphone (Blue) Inside a Major Falling Wedge Bottom

Gold has Formed a Megaphone (Blue) Inside a Major Falling Wedge Bottom

Gold has formed a major falling wedge bottom (purple on chart) with the minimum required touches on its sides.

Usually after putting in the minimum required touches to complete a falling wedge, a price will megaphone for a while to complete the bottoming process, and gold has established clear megaphones (one of them blue) within its falling wedge. Now gold is back at the bottom of both its blue megaphone and purple falling wedge, and it’s time for a swing to the top of both formations.

Gold is Completing a Bottom before a Swing to 1200ish

Gold is Completing a Bottom before a Swing to 1200ish

Gold will complete either a megaphone bottom, an inverse H&S or a falling wedge bottom here. An upwards breakout from any complete bottoming formation is a set-up to go long for the swing to the formation tops at roughly 1200.

 

Euro Falling Wedge Bottom Should Set Up a Good-Sized Move

Euro Futures are Completing a Falling Wedge Bottom (Red) on a Maxed Out Price Channel Move

Euro Futures are Completing a Falling Wedge Bottom (Red) on a Maxed Out Price Channel Move

There are a lot of ways of looking at what’s happening on the euro 60-minute chart. But the clearest signal comes from a couple of price channels (orange and gray on chart), for which the euro is now forming a falling wedge bottom (red on chart).

The euro has maxed out the number of waves it can put in a price channel (orange) and roll-up channel (gray) before a sideways move or bottoming pattern.  And because the channels formed within a megaphone on the euro daily chart, an upwards breakout from the red falling wedge is likely to result in a sizable move up.

The Euro is Forming a Megaphone Right Shoulder on its Inverse H&S Bottom

The Euro is Forming a Megaphone Right Shoulder on its Inverse H&S Bottom

The euro should make it back to at least its pink megaphone VWAP at roughly 1.1130. But it is likely to make a new high within the pink megaphone and could even break out upwards from it after a retrace to the megaphone VWAP.

It could also use the pink megaphone to set up a larger megaphone that incorporates the March low.  In that case, the euro could stay within the larger megaphone for years and could eventually break out in either direction.

DX H&S with Megaphone Right Shoulder

DX Megaphone Right Shoulder Means a Likely Squeaker New High

DX Megaphone Right Shoulder Means a Likely Squeaker New High

The dollar index (DX) has a formed a head and shoulders with a megaphone right shoulder (red) on its daily chart.

A megaphone right shoulder usually means a squeaker new high.  Often that new high will be the head of a larger H&S that will complete and break out downwards.  Sometimes a price will form a larger megaphone instead.  In these cases, the price can stay in the larger megaphone for years.

DX is forming a rising wedge top on the approach to its March high.

DX could also retrace to the megaphone VWAP at roughly 96 before breaking out upwards (purple scenario), but the odds of that are low.

ES Hanging Around Before Mandatory Retraces

ES Potential Rising Wedge

ES Potential Rising Wedge

ES is chopping around before carrying out mandatory retraces to 2050, 2000, 1950, 1850 and 1800.

It could head down from here to 2050 (purple and green scenarios) and bounce there or not.

There’s a potential rising wedge (navy blue on chart) that may complete or not.

There’s also a potential flat-topped triangle on the chart with a top at roughly 2110 that would likely complete (if it completes) with a fake breakout upwards before heading down (blue scenario).

The play is to stay long until a topping formation completes and breaks out downwards.  If the market were to turn down from here and put in a genuine breakout through 2050, the target would be 1950, but there could be a strong bounce off of 2000 en route.