Pre-Requisite Reading: XAUUSD; Short Setup in the Money
Even though we have emphasized the bullish case for Gold in the medium-long term in this article, in tandem with our short term targets, the Yellow metal should touch the 1180.00 area before starting to rally again. We are holding a short position from April 21st in 1259.4 level, with an adjusted Stop Loss now 1270.5.
What is appealing in XAUUSD chart is the head and shoulders in H4 time frame. The signal to go short would be the break of that red dashed neckline, with a target at least 1222.0 where the lower trendline of the triangle on the daily chart is located.
A break of the neckline may put pressure on gold to retest the 23.6% retracement, and even though the bearish scenario is our most favorite for the moment with a 7/10 rank, we need to see a breach of the triangle that would pressure gold to reach yellow II.
Consider shorting below the neckline with a stop loss above 1242.10