Gold Needs a New High for its Rising Megaphone

Gold is at its Blue Megaphone Bottom & Needs a New High in its Red Rising Megaphone

Gold is at its Blue Megaphone Bottom & Needs a New High in its Red Rising Megaphone

Gold needs a retest of its July 2016 high for the prolonged triangle it’s forming on the daily chart.

And right now it’s at its blue megaphone bottom and needs a new high to form a head and shoulders top on its red rising megaphone.

 

GDX Inverse H&S Targets at Least 50

GDX Inverse Head and Shoulders

GDX is Forming an Inverse H&S Bottom on the Right Shoulder of an Inverse H&S

GDX is forming a large inverse head and shoulders bottom on its move down from its 2011 high (orange neckline).

Right now it’s working on the right shoulder of the inverse H&S, which appears to be forming an inverse H&S bottom of its own with a likely triangle right shoulder.

GDX could break out through its red neckline for a quick slice through its orange neckline to head straight for its minimum target of 50.  Or it could complete a triangle right shoulder at the red neckline and then a larger triangle right shoulder at the orange neckline before breaking out.

The inverse H&S target of 50 is just above the VWAP of the megaphone top GDX formed between September of 2009 and 2011.  GDX needs a retrace to at least that megaphone VWAP, where it could bog down for years.

Or GDX could put in some kind of fast continuation pattern at VWAP before heading up to new all-time highs.  The purple scenario is a fast slice up through the H&S necklines to a Sornette melt-up set-up at VWAP.

The green scenario is more likely.

Mini Gold Plunge Setting Up

Gold is Working on a Top Before a Plunge to the Bottom of the Gray Megaphone

Gold is Working on a Top Before a Plunge to the Bottom of the Gray Megaphone

Gold set up a legal upwards breakout from the pink megaphone inside the red rising megaphone.  The red rising megaphone is a topping pattern across VWAP of the big light blue megaphone that’s been forming since October 2o14.

That meant gold was legal to go stampeding up to a retest of the July 2016 high.  But instead, gold has gotten bogged down forming a topping pattern at the pink megaphone top.

That means gold is likely to reenter the pink megaphone for a plunge to its bottom near the red rising megaphone bottom.

Gold could be working on a topping pattern before a plunge all the way to the light blue megaphone bottom in the 700s (green scenario).  Or, more likely, it could continue to bog down in new megaphones across the 1233-1250 area as it completes a triangle (navy blue) that could break out in either direction (purple scenario).

You have to be careful about shorting here until gold actually breaks down from a complete topping pattern back into the pink megaphone.  Gold can take a long time to complete tops, even small ones.

Potential Gold Head and Shoulders

Potential Gold Head and Shoulders at the Silver Megaphone VWAP

Potential Gold Head and Shoulders at the Silver Megaphone VWAP

Gold is putting in a potential head and shoulders top at the silver megaphone VWAP (red neckline). If the H&S puts in a simple right shoulder and breaks out (green scenario), the first target is the blue megaphone bottom.

Gold could also put in a megaphone right shoulder and squeaker new high on a larger H&S top (purple scenario) or break out upwards from the H&S for a melt-up to the silver megaphone top.

Here’s what it would look like on the daily:

Gold Could Be Setting Up a Crash to the 700s (Blue Scenario) but is More Likely to Complete a Large Triangle Here (Orange or Pink Scenario)

Gold Could Be Setting Up a Fast Crash to the 700s (Blue Scenario) but is More Likely to Complete a Large Triangle Here (Orange or Pink Scenario)

The green and purple scenarios could set up a fast crash into the 700s. That is not the most likely scenario, but if you see it, this kind of crash would be a great set-up to get long.

More likely gold will continue to form a triangle across 1200 (orange or pink scenarios). The triangle could break out in either direction into a big move.