Change of direction within the Overall Downtrend - Bearish
A double top pattern paired with a red (bearish) engulfing candle in a downtrend on a 4-hour chart typically strengthens the case for a continuation of the downtrend. Here's why:
Double Top: This is a reversal pattern, and its confirmation often signals strong resistance at the "tops." If the price breaks below the neckline of the double top, it usually leads to further bearish momentum.
Bearish Engulfing Candle: This signals strong selling pressure. When it occurs after the double top and near resistance levels, it adds more weight to the bearish sentiment.
Trend Context: Since the overall trend is already bearish, these patterns act as confluences for continued downside.
Key Points:
Watch the neckline (support level) of the double top for a decisive break. If it breaks with volume, it’s a stronger signal.
Consider confirmation from additional indicators like RSI or MACD to avoid false breakouts.
Set proper stop-loss levels in case of reversals, as gold can be volatile.
Double Top: This is a reversal pattern, and its confirmation often signals strong resistance at the "tops." If the price breaks below the neckline of the double top, it usually leads to further bearish momentum.
Bearish Engulfing Candle: This signals strong selling pressure. When it occurs after the double top and near resistance levels, it adds more weight to the bearish sentiment.
Trend Context: Since the overall trend is already bearish, these patterns act as confluences for continued downside.
Key Points:
Watch the neckline (support level) of the double top for a decisive break. If it breaks with volume, it’s a stronger signal.
Consider confirmation from additional indicators like RSI or MACD to avoid false breakouts.
Set proper stop-loss levels in case of reversals, as gold can be volatile.
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