Gold: Median Line Of Bearish Channel Retested as Short-Term Bullish Momentum Corrects
The daily candle chart below shows the price of Gold over the medium term and trading around 1334.00 time of publication today.
Gold had been recently ascending up two bullish trend lines (point 1 in yellow and point 7 in green on chart)where after breaking above the median line of a medium term bearish channel (point 2 in red on chart) the momentum lost its speed and corrected back towards current levels.
If the median line cannot be regained in coming days, GOLD should trade lower, whereas if this line is recovered - although a small bull-run could follow, the bearish channel and trend lines (point 2 in red on chart) should maintain the downtrend there.
Last time the Gold CFD was covered in the Ideas You Can Trade series, the median line was noted as a target - and was subsequently reached, and after this a short pullback occurred for the metal at just below that line which just lost its hold.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1339.00 with a Limit to take profit @ 1389.00 and a stop-loss @ 1299.00 Risk/Reward Summary: Limit risk = +50.00 Profit / (-40.00) stop-loss risk = Gain to Loss ratio = 1.25
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1318.00 with a Limit to take profit @ 1301.00 and a stop-loss @ 1332.00 Risk/Reward Summary: Limit risk = +17.0 profit / (-14.0) Stop-loss risk = Gain to Loss Ratio = 1.21
Medium Term Daily Candle Chart: