The daily chart for spot gold shows a head and shoulders top reversal pattern whose neckline was breached today, setting the stage for a potentially sharp drop in the value of spot gold.
The left shoulder takes shape in mid-November with the head forming in early December at the all-time high of $1,431. The right shoulder formed in early January. A rising neckline can be found underneath the left and right shoulders. This line was breached earlier today following a selloff in spot gold.
Estimating the price move from the reversal pattern brings a potential decline of $92. Measuring from today’s breach of the neckline targets the mid-June high of $1,265. This level coincides with the 61.8% Fibonacci retracement from the July low.
