By Russell Glaser
The daily chart for spot gold shows a head and shoulders top reversal pattern whose neckline was breached today, setting the stage for a potentially sharp drop in the value of spot gold.
The left shoulder takes shape in mid-November with the head forming in early December at the all-time high of $1,431. The right shoulder formed in early January. A rising neckline can be found underneath the left and right shoulders. This line was breached earlier today following a selloff in spot gold.
Estimating the price move from the reversal pattern brings a potential decline of $92. Measuring from today’s breach of the neckline targets the mid-June high of $1,265. This level coincides with the 61.8% Fibonacci retracement from the July low.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
