The last time we spoke about Gold Futures we were just breaching the Trend Resistance line after a pretty decent correction and were looking for a bounce to the 955 area. Summary for 4th April “All the signs are that we may well have done enough to the downside. We will gain in confidence once we get through the Trend Resistance at 908 but we can’t get too carried away until we have breached the last peak failure at 955. A close below 887.6 would not be good news though.”
Our Fibonacci level at 887.6 carries even more weight now as does our resistance level which has been fine-tuned to 956.4. Today’s small chart indicates that we have witnessed a failed Head and Shoulders.
Indicators in Play
A Head and Shoulders pattern consists of four basic components. A left peak that forms this shoulder, a higher peak in the center that forms the head and a third lower peak that forms the right shoulder. Finally we draw a line between the two dips to form the neckline. A break of this neckline indicates lower prices but a break back through this point tells us that the formation has failed.
Summary
We are currently bang in the middle of two key levels and until 887.6 or 956.4 are breached on a closing basis we will be looking to play the range. If we did begin to slide though there is still potential for a complex Head and Shoulders, but we shall cover that in a future report should this occur.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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