Bearish reversal alert: Gold’s head and shoulder pattern indicates a sharp decline ahead”

November 07, 2023 01:14 AM PST | By Invezz

Bearish reversal alert: Gold’s head and shoulder pattern indicates a sharp decline ahead” — Image source: Invezz

XAU/USD trading strategy

Buy/sell asset: Sell XAU/USD
Entry price: $1,978.2
Stop loss: $1,993.5
Leverage: 1x
Take profit 1: $1,960.0
Take profit 2: $1,937.0
Take profit 3: $1912.2
Timeframe: 1 week
Maximum profit: 3.32%
Maximum loss: 0.77%

XAU/USD chart and technical analysis

The price of Gold has been in a steep bullish trend since last month and gained almost 11% since then. However, the appearance of the bearish head and shoulder pattern indicates a sharp decline ahead.

The head and shoulder pattern is a bearish reversal pattern that appears when bears dominate the market and a bearish trend is followed afterwards.

I am expecting the price will retest the neckline around the $1,978.25 resistance level before dropping to the $1,912.2 support level and beyond.

Gold fundamental analysis

Fundamentally, the gold rally was mainly influenced by the Middles-East crisis. As the intensity of the crisis declines the price of gold will also possibly drop.

Moreover, the dollar index was making a correction and was dropping which also helped the gold rally. Now that the Middle East crisis is less relevant and the US dollar seems gaining strength a short trend on gold will likely follow.

Gold to US dollar trade idea takeaways

The appearance of the head and shoulder pattern on gold indicates a potential bearish trend ahead.
The price will possibly drop to the $1,912.2 support level in the coming days.
Multiple take-profit levels have been added to secure profit along the way.
The risk-to-reward ratio on this trade is 1:4.2.
The entry and stoploss prices have been placed at secure levels with the least probability of getting hit.
Good luck!

The post Bearish reversal alert: Gold's head and shoulder pattern indicates a sharp decline ahead" appeared first on Invezz

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.