Tensions in the Ukraine provided a big rally in gold that is now forming a technical bearish Gartley pattern. The longer-term trend for gold is bearish, but continued chaos amongst Pro-Russian separatists and Ukraine troops will continue to provide trading days where the precious metal will rally and squeeze out may short-term sellers.
Price action on the four-hour chart shows that point D of the Gartley pattern may have been formed just below the 127.2% Fibonacci expansion level of the B to C move. Price is also respecting the 50-day SMA at $1,316.90. If valid we very well could see a continued correction target a retrun back to the 200-day SMA which also coincides with the psychological $1,300 level. A bullish rally above $1,328 would invalidate the pattern. Further support could target the $1,284 zone.
The trade: Sell Gold at $1,312 with a stop loss at $1,318 and a take profit at $1,300. The Risk/Reward Ratio is just under 1 : 2
Edward J. Moya
WorldWideMarkets Online Trading