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  • Gold is in a bullish 1-hour environment, testing 8-EMA/structure confluence. 
  • Bulls have risen through a short-term low volume area, but bears seek a run back to VPO and beyond. 
  •  Head and shoulders, however, risks a meaningful correction to the downside. 

At the start of the week, it was noted there was potential for a restest of the demand structure in the 1850s:

  • The Chart of the Week: Gold and Silver, squeezing out the last drops?

However, bulls took control and the price corrected deeper, penetrating a 61.8% Fibonacci retracement level at $1,891 of the daily bearish impulse. 

4-hour chart

In the above chart, the price rallied to test the 61.8% Fibo, but it has also formed a reverse head and shoulders.

That structure could be a spanner in the works for the bears expecting the current resistance structure to hold. 

The price could become trapped at this juncture, but a breakout of either side of the channel could be an opportunity. 

The volume point fo control for the 20th Oct to today’s range is located at 1903, so if the price holds 1893 there are prospects for a day trade to test the vicinity of the figure.

However, while below the counter trendline resistance and aforementioned POC, there is a downside bias on the daily chart which brings the 1850 level back to the table. 

Moving back down to the 4-hour time frame, there will need to be some consolidation and bearish structure formed in the low 1890s before an appropriate setup could be established. For the time being, the environment is still marginally bullish.