Giant Diamond Pattern Is Weighing on Gold
Gold appears significantly overbought, with technical signals resembling those seen in October 2011 when it set a long-standing record of $1,920 per ounce. Now trading at $3,322, the metal seems primed for a correction, with a downside potential of at least 10%, targeting the $2,950–3,000 range.
The technical setup supports this bearish view. A failed diamond reversal pattern formed in mid-April has now expanded into what could be the largest diamond structure in gold trading history, and a strong reversal signal. Momentum indicators are showing signs of exhaustion, and recent gains may have been driven by speculative fervour rather than fundamentals.
Fundamentally, the softening of U.S.–China trade tensions and a potential false breakout above trend resistance further weaken the bull case. With upward momentum fading, a pullback seems increasingly likely.
Your short strategy from current levels with a target at $3,000–3,050 appears well-reasoned. The stop-loss at $3,630 provides a sensible buffer above the highs in case of unexpected volatility.
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