- Gold bears waiting for a break of support structure.
- A 1:3 risk to reward trade could be on the cards on the break and restest of the structure.
The price of gold has been sucking in the bears since the break of the 1930/20 support, only to pull in demand again at the 1850 mark.
This has given rise to an uptrend to test the resistance once again, (old 1920/30 support).
However, the price is failing here and is forming a head and shoulders on the daily chart.
The right-hand shoulder is, however, struggling to break the rising support on the 4-hour time frame.
A break below the support will likely fuel the bear's plight in attacking the downside towards a monthly target area as being a 38.2% Fibonacci retracement of the March 2020 rally.
The following is a top-down analysis that offers a bearish case and 1:3 risk to reward and high probability set up.
This will evolve on a break below the 4-hour support line and what would be expected to complete the head and shoulders pattern and a 38.2% Fibonacci retracement.
Weekly continuation on the cards
Daily head and shoulders in the making
A sell limit can be placed once the support structure is broken on the presumption of a retest of the structure that should act as resistance on entry.
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