We are going to look at a follow up on this pair which we did during 25th-29th March. During the previous analysis, there was a triple top that was supported at the neckline which is labeled as the support level now. Bulls sustained the rally after the bounce off the support up until we got to the resistance zone. The second last candle stick was an inside bar and we can see what ensued after that. Finally we broke out of the consolidation by a huge bullish candle stick.
Price has been ranging between these two levels, (call it a rectangle if you like) since the beginning of the year. Eventually a breakout has occurred and our bias becomes mainly bullish. We shall therefore be patient to see whether we shall experience a pullback as well or if bull power will sustain pushing price much higher.
This week we are going to look at gold vs the Euro. Evidence of a trading confluence has been sited which should keep us on high alert as price action traders. Quickly looking to the left, we can see bulls were having a splendid time as they gradually rallied the price. A consolidation later followed in the form of two price patterns as advertised by the charts. Within a symmetrical triangle illustrated by the yellow trend lines, we see an almost picture perfect head and shoulder pattern. Both chart patterns have broken to the downside denoted by a close below the patterns by the breakout candle stick.
Bears exhibit an intention of taking price for a waterfall; this is evident by the break and close below the patterns. There might be a pullback towards the neckline/trend line to test the boundaries. If the boundaries hold this will give us an ideal and confirmed entry position after the retest. At this moment we wait for two things, a confirmation of the bear dominance by either another bearish candle or a retest.