Gold: Pullback After Median Line of Channel Now Met Bullish Line Of Short Term Trend
The daily candle chart below shows the price of Gold over the medium term and have last traded at 1,293.75 as this trading week finished just hours ago with the close of the New York session.
In recent weeks, since Gold was last covered in the Ideas You Can Trade series, when a pullback off the median line of the medium term channel was underway, the bearish momentum that followed had brought prices to current levels where support was found today on a bullish trend line.
This trend line had been previously drawn, from the last post, when its trajectory was extended into the future, at that time, and now its validity may be further tested.
Since session lows today corresponded to this support line, if this dynamic line continues to hold, then it may be enough to reverse the bearish momentum, whereas if this line fails then Gold may continue even lower.
Overall, the medium term trend in Gold still looks bearish, with no breakout of the overall medium term bearish channel in close proximity, and the recent bullish momentum already reversed in the last few weeks.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1315.00 with a Limit to take profit @ 1380.00 and a stop-loss @ 1289.00 Risk/Reward Summary: Limit risk = +65.00 Profit / (-26.00) stop-loss risk = Gain to Loss ratio = 2.50
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1269.00 with a Limit to take profit @ 1209.00 and a stop-loss @ 1301.00 Risk/Reward Summary: Limit risk = +60.0 profit / (-32.0) Stop-loss risk = Gain to Loss Ratio = 1.87
Medium Term Daily Candle Chart: