Greetings everybody,
So, gold indeed has shown spike to ~ 1530 area, where the top of right arm should stand. Now we have the task to clarify whether this is indeed the top of the right shoulder, or market still could proceed higher. Because it is too many things depend on this top - either market will drop to 1450 area or turns to new high.
Here is two potential scenarios. First is downside continuation. In fact, here we've got pretty nice bearish engulfing pattern, and we have uncompleted OP target. Besides if you measure the x-a swing 1.27 extension down - you'll get precisely the OP value. Thus, it is downside butterfly possible as well.
Second scenario is attempt to climb higher and finally hit 1530 level. This could happen in a shape of AB-CD. In this case our H&S should start by '222" Sell. And now we need to specify signs that could help us to recognize which one scenario is forming:
For this puprose we need to keep an eye on 1H chart and engulfing pattern. First scenario suggests that retracement here should be gradual, better in a shape of AB-CD pattern to form '222" Sell pattern. Other words speaking, we need to aviod any rally here and streight up action above 5/8 Fib level.
Conversely, if we will get this rally - we automatically turn to second scenario.
Thus, if you already have the shorts - move stops to breakeven and take at least 30% profit on your position. If you do not have anything - keep your eyes open, wait either for "222" Sell here, on 1H chart, or upside breakout to consider larger "222" Sell on 4H chart, accoroding to our second setup.