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.