Prices for gold were falling sharply since the beginning of November but have entered a consolidation mode several days ago. That created a bearish pennant pattern on the daily chart of the commodity. As the name “bearish” suggests, the pattern forecasts continuation of downward move after the consolidation period.
The pattern itself is shown on the present chart by the yellow lines. The cyan line offers an entry point for short positions if prices will indeed move down and is moved from the lower border of the pennant by 10% of the flagpole length. The green line is situated below the cyan line by the flagpole’s length and provides a
It is important to remember that chart patterns do not work 100% of the time as was demonstrated by the same bearish pennant pattern that formed on chart of silver in October but was invalidated by a move of prices higher.
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The chart was built using the ChannelPattern script. You can download a MetaTrader 4 chart template for this gold pattern. You can also trade it using the free Chart Pattern Helper EA.
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