The Chart of the Week: Gold on the verge of completion of bearish H&S
- Gold specs adding shorts and price forming a bearish Head and Shoulders.
- Bears can target prior structure in the 1830s.
Speculators reduced their net gold positioning, adding shorts as stimulus newsflow skewed to the negative side.
From a technical perspective, this gives rise to confirmation of downside prospects, if not to continue to trade in a range-bound manner in the near-term.
The following is a top-down analysis to illustrate the bearish potential.
Monthly chart
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The price has room to go before meeting a 38.2% Fibonacci retracement.
Bears will be looking for weekly and daily direction to marry-up.
Weekly resistance
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Stong resistance keeps the bulls in check, creates prospects for the downside.
Daily bearish head and shoulders
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From a 24-hour perspective, the formation of the right-hand shoulder of what appears to be the making of a head and shoulders is encouraging.
Bears can enter the market with a stop loss above the structure and target at least a -0.27% Fib at 1832.
However, there are still longs being added on a positioning basis which means there is still room for a move to the upside.
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Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
