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.