August Gold’s daily chart is in a very clear downtrend that projects to 1221.20 (see inset). What gives the bearish pattern its authority and presumed precise reliability is the ‘legitimacy’ of the 1240.20 ‘B’ low on 6/3. It lies three ticks beneath a key external low recorded on January 31, and is therefore not ‘sausage’. The tradable implication is that you can bottom-fish the 1253.10 midpoint support with a very tight (i.e., perhaps four- or five-tick) stop-loss. However, if it’s hit, a further fall to the 1221.20 target should be regarded as likely. Please note that the foregoing would be invalidated if the futures can rally above 1285.10, the point C of the pattern.
