Gold Ready for Breakout

Gold has Put In a Potential Inverse H&S Bottom within its Pink Falling Megaphone and is Ready to Break Out into H&S Right Shoulder

Gold has Put In a Potential Inverse H&S Bottom within its Pink Falling Megaphone and is Ready to Break Out into H&S Right Shoulder

Gold has drawn a potential double-headed head and shoulders on its daily chart at a critical level. Now it’s ready to break out of the pink falling megaphone to put in the right shoulder.

A Downwards Breakout from the Double-Headed H&S would Target Either the Silver Triangle Bottom or Navy Blue Megaphone Bottom

A Downwards Breakout from the Double-Headed H&S would Target Either the Silver Triangle Bottom or Navy Blue Megaphone Bottom

A downwards breakout from the H&S targets either the silver triangle bottom or navy blue megaphone bottom.

The H&S could also fail to break out, or put in a small fake breakout, to keep gold megaphoning across roughly 1250 until it completes the silver triangle.

Gold Critical Decision Point Coming Up

Gold will have a Critical Decision to Make at the Red Megaphone VWAP

Gold will have a Critical Decision to Make at the Red Megaphone VWAP

Gold has broken out of its blue rising megaphone and is approaching its critical decision point at the red megaphone VWAP at roughly the March 10 low.

Since gold broke out of the blue rising megaphone without a proper top, it’s either morphing the formation into the pink megaphone within the larger navy blue triangle or it’s morphing it into a double-headed head and shoulders top at the red megaphone VWAP before a collapse to the red megaphone bottom.

A right shoulder bounce off VWAP would set up, but not guarantee, the larger move down (purple scenario).  A faster breakdown through VWAP would favor the green scenario.

Either way, gold is likely to break through VWAP to take out the December 2016 low and retest roughly 1100 at the pink megaphone bottom. Gold would then likely retest the red megaphone VWAP before either a breakout downwards from the pink megaphone to the red megaphone bottom or a breakout upwards through VWAP to the pink megaphone top.

Gold Textbook Triangle

The Blue Megaphone and Pink Rising Megaphone Lock Gold Into a Textbook Triangle Scenario

The Blue Megaphone and Pink Rising Megaphone Lock Gold Into a Textbook Triangle Scenario

Between the pink rising megaphone and blue megaphone, trading formation rules now pretty much lock gold into a textbook megaphone-inside-megaphone triangle scenario.

An upwards breakout from the red triangle would be an upwards breakout from an inverse head and shoulders bottom with a triangle right shoulder.  The technical inverse H&S target would be at least 1800 but the long move sideways would imply a new all-time high for gold.

Gold Long-Term Rising Megaphone

Gold Long-Term Rising Megaphone

An upwards breakout would usually mean gold was extending its long-term rising megaphone (blue in chart above).

A downwards breakout, which is more likely, would target the 700s and likely lower in the course of forming a bottom.  A downwards breakout would complete the blue-rising megaphone with a retrace to its bottom.

Gold Still Heading Up

Gold is Putting in a False Top Near its April 17 High but is Highly Likely to Go Higher

Gold is Putting in a False Top Near its April 17 High but is Highly Likely to Go Higher

Gold has formed a new megaphone across 1250ish and has reached the level of the previous April 17 high within this megaphone. A price would often put in a false top here and retrace as far as VWAP at 1250-51ish before heading up to a new high for the megaphone.

The pink rising megaphone on the chart strongly suggests gold will head up to at least the top of the potential red triangle (that triangle bottom is likely to be redrawn).

If gold makes it as far as the blue megaphone top I’ll be redrawing the most likely scenarios.  Right now the green is such a strong favorite I’m not cluttering up the chart with others.