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Today’s Trading Edge: Gold Forms a Bearish Gartley Pattern on Safe-Haven Rally

Posted by Edward Moya on May 5, 2014 6:39:00 PM

WWM GOLD MAY 5 2014

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

Technical Strategist

WorldWideMarkets Online Trading

 

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