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Forex Signals

Gold Consolidates in a Triangle Pattern

Description

In its 4-hour chart, the Gold price exposes a corrective sequence that follows the structure of a descending triangle pattern. This chartist figure suggests the possibility of a bearish continuation.
In the same way, according to the Elliott wave theory, the corrective pattern that follows a 3-3-3-3-3 sequence remains incomplete. Until now, the triangle pattern should complete its wave e of Subminuette degree identified in green before continuing its bearish short-term trend.
On the other hand, the RSI oscillator tested the zone below level 40, suggesting the change of the short-term bias from bullish to bearish.
In this context, there exists the possibility of a limited upward move toward the zone between $1,955.70 and $1,973.33 per ounce, from where the precious metal could complete the wave e in green and found fresh sellers expecting to incorporate their limit short positions.
We expect the test of the $1,956 per ounce from where the yellow metal could start to decline with a potential profit target in the zone of $1,862.9 per ounce. This level corresponds to the Augusts’ low from where the price started to consolidate in a triangle pattern.
Our bearish scenario’s invalidation level locates at $1,993.48 per ounce, corresponding to the end of wave c in green.

Trading Plan Summary

  • Entry Level: 1,956.48
  • Protective Stop: 1,993.48
  • Profit Target: 1,863.48
  • Risk/Reward Ratio: 2.51
  • Position Size: 0.01 lot per $1,000 in trading account.

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By Eduardo Vargas

Eduardo Vargas is a technical analyst and independent trader based in Buenos Aires, Argentina. He is an Industrial Engineer and holds a Master in Finance degree. In 2008 began to trade Chilean stocks listed on IPSA. From 2013 started to trade CFDs on Forex, Commodities, Indices and ETFs markets. He analyses different markets combining the Elliott Wave analysis with Fibonacci tools. He provides a market mid-long-term vision.

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