Gold Crashes to Support in Perfect Rounded Arc Pattern
Wed, May 3, 12:51 PM ET, by Corey Rosenbloom
The “Rounded Arc” Reversal Pattern is one of my favorite trading opportunities when it appears.
Why? Let’s take a look at Gold and note the ideal symmetry and forecasting aspect of this key reversal pattern:
Gold established a base at the $1,250 level and then broke higher through April toward our $1,300 target.
From there, negative divergences and a big increase in sell (bearish) volume set the stage for an intraday reversal.
That’s exactly what happened as momentum burst to new indicator lows and price began a new downtrend.
Our operating target was once again the $1,250 level and price achieved it today after completing a powerful Rounded Arc Reversal Pattern.
It’s my favorite because it gives a clear target – the prior low – and the right side of the chart (the side you’re trading) resembles the left side of the chart (that “built” the pattern).
The goal is to hold confidently on a breakdown (in this case, beneath $1,280) toward the target or (as is my preference) limit your risk by trading more actively in the sell-swing phase (right side of the pattern in development).
You can trade either breakdown/breakout setups or classic retracement opportunities that develop along the pathway “down away from” $1,300 “toward” $1,250.
With the pattern complete, be on guard for a short-term reversal here or else a surprise acceleration beneath $1,250.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
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