Hello and welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index. Welcome back to another lesson in technical analysis and chart reading. As always, these are simply for information and educational purposes only.

Well gold is still looking like it's doing something interesting and a lot of people have been wondering are we going to see higher highs. Well, I want to take a look at what we've recently discussed in gold because there was some really telling clues as to what was going to happen next and it's been really interesting both from a bullish and a bearish point of view.

So have a look at this chart. I'm not going to give you any indicators or any clues as to what's actually going to happen, but what do you see because of course, recently, when the market was heading higher, we all expected to see these big moves towards the $2,000 level. But instead, there were other things happening at very specific price levels but also on a pattern basis.

Now recently, gold prices have been heading lower, so the obvious thing is that it's moving sideways. It seems to be stuck in a range, but it's also on a short-term timeframe heading lower and that's clear and that's without using any indicators or any major patterns at all.

Now here I've added the simple 20 day moving average. That's obviously going to tell us that the market is trading below the moving average. So if you're a short-term trader, one of the simple techniques we looked at was the close above or the close below the moving average and recently, the market did close below the moving average initiating a short position and so for the bears, this is still a good move towards the downside.

There is a gap between the market's current position and also where the moving average is, so one of these is going to catch up with each other at some point in the very near future.

So, using simple moving averages can sometimes help. They don't always work because they are lagging indicators, but they are quite useful just to see what the overall direction of the market is if you want to start trading using simple indicators.

But also pay attention to the slope. If the slope is downwards, it's bearish. If the slope is up, it's bullish and of course if it's sideways, then it's just heading into a contraction sideways move.

Also use classic chart patterns. You know things like double tops, triple tops, higher highs, higher lows, or lower highs, lower lows. These are also very, very good to pay attention to and then multiple timeframe is important and hence on this slide what we've done is looked at the 20 period moving average but on a weekly chart. This is really important.

Notice that previously we did close below the moving average but then reverted that, so we didn't take out the low of that price bar, but right now the market has closed below the moving average on a weekly basis and we've taken out the low. So this is suggesting, at least for the intermediate term, also for the shorter term, this market is bearish and we need to pay attention to that.

Also, the parabolic SAR which we discussed previously in one of the previous lessons, we noticed that the parabolic SAR had been broken and right now that's been respected. So in other words, the market has followed through, so we've had some really good trades both on the short-term and intermediate term for gold. Until that parabolic SAR has been cleared on the upside. Until we've closed back above the moving average, this market right now seems to be bearish unless of course we reach support levels.

So take a look at this chart over here. We talked about the three drivers of the top pattern previously and of course the market respected that at $1,432. But right now there's a pivot low support at $1,317 which we've just tested. The key thing to watch out for right now is the closing price. Are we going to close on a weekly basis below $1,317? If we do, then the likely target is going to be the $1,271 high which was the previous high which should now then become support. It doesn't always work, but it's a potential move ahead.

Otherwise, the alternative scenario, because there as always you've got to have alternative scenarios, is that this market might dip below that $1,317 which it already has done, but play in that region and then head back into this channel. So we could be trading within a range of $1,317 to $1,432 and that will be a classic consolidation pattern.

I think a lot of gold traders are really looking for these higher highs and of course at the moment we have got higher highs, higher lows, so the trend on the longer term is still bullish, but right now this is a congestion pattern.

Also, are there any subtle clues? Yes there are. If you take a look at the previous declines, the one that we've seen recently on the daily chart has been greater. Or in other words, it's more impulsive than the previous ones. That's suggesting that this is a deeper correction, a deeper retracement and also the $1,300 level, what is that? We've discussed this in some of the very early lessons. It's a psychological price level. So it's possible that gold could head even lower still below that $1,317 aiming for the $1,297/$1,300 before finding support and then heading back towards the upside.

So I like gold. I like various other indices and some of the commodities markets right now. I think we've got some good opportunities and it's time to keep an eye on these charts.

So always pay attention to the larger degree trend and see if it is revealing a reversal on the weekly charts and watch for the nearby support levels, the psychological price levels as well, and of course, use the candlesticks patterns to assist with reversals. Lose your opinion and listen to the market because it's telling you a story.

I hope this has been useful for you. In the meantime, have a great and safe trading week. This is Sandy Jadeja.