Green line -neckline support
Red lines- Head and Shoulders pattern
In our previous analysis on Gold we warned that Gold price was vulnerable to a move towards $1,750 as the Ichimoku cloud indicator pointed that bears remained in control of the trend. Combined with a break below $1,790, Gold reached very fast the $1,750 target we mentioned yesterday. Gold price has broken below the green neckline support as shown in the Daily chart above. The Head and Shoulders pattern has been activated and bears will expect Gold price to continue lower towards $1,700-$1,650 next. In order for this bearish pattern to get canceled, Gold bulls will need to at least recapture the neck line and eventually break above the highs of the right hand shoulder. Our simple technical analysis and our Ichimoku cloud analysis agree on the importance of the resistance area of $1,870-50. As we mentioned before, as long as price is below this area, Gold will remain vulnerable to selling pressures.