Gold Inverse Head and Shoulders Leads a Metals Breakout Watch While Oil Rolls Toward Its Neckline

Gold is holding the $4,000 level with an inverse head and shoulders that needs only a right shoulder to complete. Once that shoulder forms and price breaks out, the measured move puts the area around $4,400 in play. Silver, palladium and uranium are all working against downsloping trend lines with a similar look. Oil has the opposite setup: a head and shoulders that measures lower once the neckline gives way. Natural gas rounds out the six charts from my Pro Charts session on Wednesday, November 11.

Gold Holds the $4,000 Setup as an Inverse Head and Shoulders Forms

Gold has fallen about 15% since it peaked at the end of August, and it is now trading around the key $4,000 level. Gold had been trading in a very consistent downtrend, with repeated hits along the same line, and it finally broke up and out of it. That break is what turns this chart from a downtrend into a breakout watch for me. Now it is pulling back. When price hammers on a trend line long enough, the breakout often retraces to that line before the explosive move higher. That retrace, then the follow-through, is the sequence I would be targeting on gold.

The second factor is a potential inverse head and shoulders. Two rules apply here: a downsloping neckline, which gold has, and a head that no shoulder surpasses, which it also has. The only missing piece is the right shoulder. I anticipate the pattern completes and breaks out, and depending on where that break happens, tomorrow or next week, the measured move is about 7% higher. That lands in the previous consolidation and resistance overhead, and a solid move could reach around $4,400. A measured move is a guide to where price could go, not a destination.

Two factors stacked on the same side raise the odds, and I want to be the casino. That holds only while gold stays above $4,000, the level it needs to keep for this thing to eventually break higher.

• $4,400: inverse head and shoulders measured move area, prior consolidation and resistance
• $4,000: the level gold needs to hold

Silver Tests Its Downsloping Trend Line

Silver carries a similar pattern to gold: left shoulder, head, right shoulder, only much smaller, with steeper trend lines. Do you see the sequence? A pivot high, then test after test along the same downsloping line, and now an attempt to break up and out of it. That line is the key resistance. I am watching for a break and confirmation above it before silver can follow through.

Should silver catch another leg up, the first resistance sits around $58, where there is plenty of previous consolidation. After that it needs to test $60, and then the pivots around $71.

Palladium Bounce Runs Into $1,100 Resistance

Palladium came down, bounced nicely and broke through its trend line. These charts are all about momentum: when price keeps hammering against downside momentum and finally breaks to the upside, I look for an explosive move. The bounce got to around $1,100, and the previous consolidation makes $1,100 to $1,150 the resistance region I am expecting.

Precious metals generally like to move together, so palladium is a follow-through watch for me. I want gold to catch a bid and push higher first, and then the palladium bounce to continue into that $1,100 to $1,150 resistance region.

Uranium: What Would a Breakout Need?

Uranium is trading in a clear downsloping trend line, tested at one pivot after another and again as of late. The playbook matches the metals: a break above the line, confirmation, and potentially a retrace back to that trend line before a move higher. Until that break confirms, the trend line itself is the resistance I am watching.

Oil Neckline Break Is the Bearish Trigger

Oil is falling on hopes of a deal and a potential end to the war, following the backlash seen on the night of the midterm elections, and it is now trading below $100 a barrel.

The chart has a clean head and shoulders, with a left shoulder, a head and a right shoulder. A solid break of the neckline and a move lower carries a measured move of about 26%, running into a key support level at the pivot low around $67 to $68, the lowest point since the war began. Lower gas prices would be welcome, and I count myself in that group.

One thing I am watching is whether oil first retraces to the neckline or just begins to fall. The other direction matters too. Should oil perk up and the war escalate, a move above the high pivot around $107 negates the pattern. As long as price stays below the $107 region, the head and shoulders remains valid.

• $107: high pivot; above it the head and shoulders is negated
• $100: the line oil is trying to stay below
• $67 to $68: measured move area and pivot low since the war began

Natural Gas Reclaims Its Upsloping Trend Line

Natural gas was attempting, again and again, to break up from its previous head and shoulders neckline. The upsloping trend line is the shift here: price has pushed back above it and confirmed. The first level to beat is the $3.27 region, where a ton of consolidation and high pivots provide resistance. Above that, the next key level is $3.34. My read runs both ways from here: either gas clears those levels or it gets the full retrace it appears to be making for now.

Levels That Matter

Bottom Line

The final read: for me, these are break-or-retrace setups, not standalone measured moves. Gold needs to hold $4,000 for its inverse head and shoulders and the measured move toward around $4,400 to stay in play. Oil needs a solid neckline break before the $67 to $68 area comes into view, and a move above $107 negates that pattern.