Gold has drawn our attention with a potential inverted head and shoulders pattern forming on the hourly chart, echoing the technical setup recently observed in silver. The convenience of this setup is that it offers opportunities for both long and short trades.
This pattern, recognized by three consecutive troughs — the head as the lowest and the shoulders forming higher lows — signals a possible shift from bearish to bullish momentum when confirmed.
A convincing breakout above the neckline, complemented by rising volume, marks the beginning of an upward trend. For this classic reversal pattern to remain valid, price should not exceed $4,068 to the upside or fall below $3,860, which would undercut the head and invalidate the setup.
Suggested Setup
Bukowski’s research places the inverted head and shoulders pattern solidly in the upper ranks of reliability, with a historical average gain of 45% from breakout and a 71% probability of hitting its measured objective.
For gold, an IHS breakout targeting the measured move from the neckline would extend to the 1.13 Fibonacci from the all-time high to the head, around $4,450
Short Setup
- Entry: $4,127–$4,150
- Stop Loss: $4,184
- Take Profit 1: $4,068
- Take Profit 2: $4,000
- RR: 2.06
Long Setup
- Entry: $4,000-4,020
- Stop Loss: $3,860
- Take Profit 1: $4,125
- Take Profit 2: $4,450
- RR: 2.69
Read More: Silver Price Prediction: Is Silver Poised for a Major Breakout?
Disclaimer: The content presented herein is for informational purposes only and should not be interpreted as financial or investment advice. While efforts have been made to ensure the accuracy of the information, no guarantees are made regarding its completeness, reliability or suitability for any particular purpose. Financial markets carry inherent risks, and historical trends do not ensure future outcomes. Before making any financial decisions, we strongly advise seeking guidance from a qualified professional. The authors and publishers disclaim any liability for actions taken based on the information provided.
