Forex Trading Technical Analysis (2011/10/18) Gold Makes Tentative Breakdown Move
(Please click on the forex chart thumbnail to enlarge)
10/18/2011 Forex Trading Technical Analysis (FXpath.com) – Gold (daily chart) as of Tuesday (10/18/2011) has made a pronounced drop below its wedge pattern consolidation, which hints at a potential continuation of the bearish run that originated from the early September all-time high around 1920. This wedge pattern, which can also be considered a large inverted pennant pattern, represented a slightly bullish pullback consolidation that occurred after gold’s plummet down to the 1532 low extreme back in late September. After that low was hit with a strong hammer candle, price consolidated into a tight and converging three-week pullback move (that conveniently rose to around the 38.2% Fibonacci retracement of the bearish run’s high-to-low), before making the current tentative breakdown of the wedge pattern. Further downside momentum on the current bearish move could go on to target the 1550 support region.
(Forex chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)
James Chen, CTA, CMT (bio)
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