Interesting PA seen on gold this morning...
Another pretty much sideways day for the yellow metal on Tuesday, with very little in the way of fresh drivers.
Fixed around the underside of daily supply at 1221.2-1207.5, we can see the H4 candles continue to carve out a range between 1212.5/1189.7 (houses September’s opening level at 1200.0). Also eye catching on this scale is the converging trend lines (1182.9/1214.3), so far meeting the characteristics of a bullish pennant formation.
As you can see on the weekly timeframe, price remains languishing beneath a key resistance level coming in at 1214.4 in the shape of back-to-back bearish pin-bar formations. Further downside from this point could eventually stretch as far south as the 2017 yearly opening level at 1150.9.
As we know from the higher timeframes, the general bias (according to structure that is) is pointing in a southerly direction. Therefore, a breakout of the H4 range, and potential failure of the current H4 bullish pennant pattern, will likely occur.
Areas of consideration:
On account of the above conditions, two possible scenarios are worth noting:
1. The most obvious: a breakout of the current H4 range/H4 trend line support to the downside. Following a H4 close beneath either area, a retest to the underside is certainly something to keep an eye open for as sellers may look to make an appearance here (see pink arrows). Traders are advised to wait and see if H4 price prints a bearish candlestick formation at the retest before considering a position short, since this will help avoid falling victim to fakeouts.
2. Fade the upper edge of the current H4 range/trend line resistance (see red arrows). Like above, waiting for H4 price action to chalk up a bearish candlestick pattern off the top limit before pulling the trigger is recommended.
Fixed around the underside of daily supply at 1221.2-1207.5, we can see the H4 candles continue to carve out a range between 1212.5/1189.7 (houses September’s opening level at 1200.0). Also eye catching on this scale is the converging trend lines (1182.9/1214.3), so far meeting the characteristics of a bullish pennant formation.
As you can see on the weekly timeframe, price remains languishing beneath a key resistance level coming in at 1214.4 in the shape of back-to-back bearish pin-bar formations. Further downside from this point could eventually stretch as far south as the 2017 yearly opening level at 1150.9.
As we know from the higher timeframes, the general bias (according to structure that is) is pointing in a southerly direction. Therefore, a breakout of the H4 range, and potential failure of the current H4 bullish pennant pattern, will likely occur.
Areas of consideration:
On account of the above conditions, two possible scenarios are worth noting:
1. The most obvious: a breakout of the current H4 range/H4 trend line support to the downside. Following a H4 close beneath either area, a retest to the underside is certainly something to keep an eye open for as sellers may look to make an appearance here (see pink arrows). Traders are advised to wait and see if H4 price prints a bearish candlestick formation at the retest before considering a position short, since this will help avoid falling victim to fakeouts.
2. Fade the upper edge of the current H4 range/trend line resistance (see red arrows). Like above, waiting for H4 price action to chalk up a bearish candlestick pattern off the top limit before pulling the trigger is recommended.
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