Gold has only two courses to take: 1) break down out of the pennant formation; or 2) break up out of its pennant chart formation.

If gold breaks down from the pennant chart formation, then gold may fall to create higher-low support levels, as Louise Yamada and Stewart Thompson suggest in terms of a bullish reverse head and shoulders pattern. That is, gold would fall down and make the right shoulder of the reverse head and shoulders pattern.

If gold breaks up out of its pennant chart formation, it may run to around $1310-1320, as suggested by its $100-110 flagpole. Even if gold reaches such a range, it may still fall back afterward to to create higher-low support levels. That is, the right shoulder of the reverse head and shoulders pattern still could be made; the resulting upwardly sloping neckline would be bullish. In any event, the completion of a reverse head and shoulders pattern would be a major trend reversal of gold's post-2011 downtrend.

With best regards.

Old School