Gold: Prior Support Line Held Bounce Back Towards Middle Line of Down-Trend
The daily candle chart below shows the price of Gold over the medium term, and trading near near 1,318.95, and near session highs for today.
In the last post about Gold, at the end of March, the support line that was reached was the central theme of the article and a bounce on that line was expected, and followed.
Since then, the bullish momentum has brought Gold back towards the middle of the medium term bearish channel, where it is close to testing that median line which has been a guiding path for the trend in recent months.
While the medium term trend may still look bearish, if the median line can be regained, then the short term bullish price action that followed the bounce from the last post should continue. If the median line acts as resistance, however, than a sharp reversal could push Gold lower fast.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1330.00 with a Limit to take profit @ 1352.00 and a stop-loss @ 1309.00 Risk/Reward Summary: Limit risk = +22.00 Profit / (-21.00) stop-loss risk = Gain to Loss ratio = 1.04
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1296.00 with a Limit to take profit @ 1276.00 and a stop-loss @ 1314.00 Risk/Reward Summary: Limit risk = 20.00 profit / (-18.0) Stop-loss risk = Gain to Loss Ratio = 1.11
Medium Term Daily Candle Chart: