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Gold’s Consolidation Results in Bearish Pennant Pattern

December 25, 2016 at 18:19 by Vladimir Vyun

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 profit-taking objective.

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.

Click the image to enlarge it to a full-size screenshot:

Update 2016-12-27: The trade setup had to be cancelled due to the upward spike posted by the gold price today:

Gold - Bearish Pennant Pattern on Daily Chart as of 2016-12-27 - Post-Cancellation Screenshot

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.

If you have any questions or comments regarding this bearish pennant pattern on gold chart, please feel free to submit them via the form below.

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