Gold Topping Process
When gold broke through the top of its blue rising megaphone back on February 11, it began a topping process that will ultimately take gold back to at least the rising megaphone bottom at 1050ish, and probably to a new low (at least for gold priced in dollars).
But when a price breaks a rising megaphone top, it usually goes to a higher high within the topping process after reentering the rising megaphone. Gold has already done that.
Now gold is working its way to the pink megaphone bottom and likely a tag of blue rising megaphone bottom. Gold will then need a retrace to the pink megaphone VWAP. It would usually put in a bounce off the blue rising megaphone bottom, and that should be the retrace to VWAP.
That bounce will put a right shoulder on a H&S for the blue rising megaphone. A breakout from both the H&S AND blue rising megaphone would be a set-up to short to at least 1050ish, and likely 1000 or lower.
However, if gold forms a megaphone right shoulder at the blue rising megaphone bottom or after a breakout through it, it will likely drag out gold’s topping process and put in a higher high before heading down into the mandatory retrace to 1050ish and likely a new low.