Gold’s Intraday Rounded Reversal and Daily Levels

Nov 27, 2011: 10:24 AM CST

Gold gave us a breakdown sell signal last week in the form of broken daily support in the context of an intraday Rounded Reversal price pattern.

Let’s take a look at these new developments and what levels are key to watch in the week ahead.

First, the intraday “Rounded Reversal” pattern:

First, be sure to take a look at the prior “Fibonacci and Divergence into $1,800″ Update in Gold – you can trace the analysis then into how it played out currently especially in terms of the negative divergences into the $1,800 level.

We can see the bigger picture here as well as how price has played to the downside, breaking one intraday support level to the next (including Fibonacci and $1,700 ’round number’).

That brings us to our current mini-triangle pattern developing between $1,680 and $1,700 with a ‘midpoint’ near $1,690.

Simply stated:

a breakdown under the $1,680/$1,670 level could trigger additional selling to complete the “Rounded Reversal” pattern that is about 70% complete (the target would be the $1,600 level);

otherwise, a breakthrough above $1,700 triggers a “Pattern Failure” signal which may initially lead to a move to $1,740 or beyond.

Of course, there’s more components going on than that, but these intraday levels can be a guidepost to watch in the week ahead.

Let’s now pull the perspective up to the Daily Chart developments:

The Daily Chart allows us to see the broader picture beyond the recent “Rounded Reversal” (or “Arc”) Pattern.

For interesting reference, a successful mini-Rounded Reversal triggered into $1,700’s confluence resistance and completed with a move back to $1,600.

Whether or not the current ‘larger’ Rounded Reversal pattern completes depends on whether buyers step in this week off $1,675 or whether sellers continue the price rout which would likely sell-off back towards $1,625 if not $1,600.

The short-term breakdown sell signal came recently on the collapse under the 20/50 EMA then $1,700 level.

Continue watching these levels to guide your trading decisions.

Corey Rosenbloom, CMT
Afraid to Trade.com

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6 Comments

6 Responses to “Gold’s Intraday Rounded Reversal and Daily Levels”

  1. kabushiki Says:

    Mr. Rosenbloom: why do traders/technicians switch intraday time aggregates so often?  i see one expert using a 240 min. chart on this, and then a 120 minute on that.  i was advised to stick with 2 time aggregates at most.  so for trading equities i go only as low as a 1-hour intraday chart for timing, if i am trading off of a daily OR a weekly chart.  due to 'round-the-clock' nature of futures, i use a 4-hour (240-min) intraday chart in the same way, since it acts similar to an hourly equity chart.
    to me it seems like technicians/chartists overdo it when they start analyzing price action over so many timeframes.  i suppose it is OK if they are just 'analyzing', but i question how beneficial it is to do so.
    also, what is the benefit of using a 120-minute chart?  2-hours is not a “normal” time aggregate – by “normal”, i mean “month”, “week”, “day”, “hour”.

  2. Corey Rosenbloom, CMT Says:

    Good questions –

    Most traders do stick with consistent timeframes when trading but still use higher frames to assess key levels/structure not seen on lower frame charts.  We're trying to create a 'narrative' of supply/demand and then pinpoint trade entries/exits/targets and lower frames can give more data or a clearer “step inside” picture than higher frames.  Also, keep in mind there are position, swing, and day traders who focus their decisions on different frames.

    For me, the 120min chart above gave a clearer, less compressed picture for illustration purposes (the hourly frame bars were too compressed for the pattern I wanted to show).  

    General rule is to build a picture from the higher frames/levels and then pinpoint with more precision on a lower frame.

  3. Corey Rosenbloom, CMT Says:

    Good questions –

    Most traders do stick with consistent timeframes when trading but still use higher frames to assess key levels/structure not seen on lower frame charts.  We're trying to create a 'narrative' of supply/demand and then pinpoint trade entries/exits/targets and lower frames can give more data or a clearer “step inside” picture than higher frames.  Also, keep in mind there are position, swing, and day traders who focus their decisions on different frames.

    For me, the 120min chart above gave a clearer, less compressed picture for illustration purposes (the hourly frame bars were too compressed for the pattern I wanted to show).  

    General rule is to build a picture from the higher frames/levels and then pinpoint with more precision on a lower frame.

  4. kabushiki Says:

    Your “General Rule”, that should be patented – that's as clear and solid an explanation as they come.  Thanks.

  5. SRSFinance Says:

    Very interesting. I'd never heard of the arc pattern and I thought I'd heard of them all. 🙂

    Whatever happens next in Europe, you can be sure printing presses at the ECB will be running around the clock, so if it does roll back to 1600 it's probably one of the better buying upcoming buying ops: http://srsfinance.com/momentum

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