Big technical picture of gold is looking potentially flag
Technical analysis of Gold (XAUUSD) daily chart from November 2012 till date
I use a number of methods that I believe is the closest to price action. Specifically I look out for:
Monthly highest and lowest traded price
Chart patterns that have high probability outcomes.
Fact #1 – lower highs each month
Pink boxes show traded price of gold in each month. Each box is 1 month in duration and the highs and lows show the highest and lowest traded price of the month. Gold started making lower monthly traded lows since November 2012 with the exception of March and May this year. But more importantly, it has not made any higher months AT ALL during this whole duration. The trend is clearly down and there is little clue that this down trend momentum is changing or will change.
Fact #2 – no bullish reversal chart pattern
Chart patterns most associated with bullish reversals like the double bottom and triple bottom are simply not visible. High probability patterns should jump out visually so if we cannot see clearly, it is a poor pattern or it is not there. On the other hand there is one pattern I can see clearly and it is bearish flag/pennant continuation pattern. At the moment the pattern is not confirmed. It will be when price breaks the supporting trend lines below.
Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.
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