Gold closed well below $1,504 on Monday, validating the bearish outside bar candlestick pattern created on Friday.
A bearish outside bar candle occurs when the price action for a specific day falls outside the high and low of the preceding day. That candlestick is widely considered a sign of indecision in the market place.
However, in Gold's case, that pattern indicated bullish exhaustion. After all, the outside bar appeared following a near 90-degree rise from $1,400 to $1,535.
Traders usually wait for confirmation of bearish reversal, preferably in the form a close below the outside bar's low.
As noted earlier, Gold found acceptance below $1,504 (outside bar's low) on Monday, confirming a short-term bullish-to-bearish trend change.0
Supporting the case for a drop to the immediate support of $1,480 (Aug. 13 low) is the impending bearish crossover on the moving average convergence. Read More...