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CFD: Ideas You Can Trade- GOLD Resistance Firm on Short Term Downtrend

Posted by Steven Hatzakis on May 1, 2014 6:28:00 AM

Gold: Resistance Holding as Short Term Bearish Channel Guides Prices Lower

The daily candle chart below shows the price of Gold over the medium term, and trading near near 1,282.65 around time of publication today.

After moving lower for the fourth straight day as resistance under a steep bearish trend line (point 3 on chart below in magenta color) has been guiding prices downwards, Gold continues to appear bearish over the very short term and medium term.

The above mentioned resistance line extends from the March 16th high of 1392.25 when Gold couldn't pierce 1400. Since then it has reversed down this steep bearish channel which still appears intact and with its upper resistance line affecting prices. Last time Gold was covered in the Ideas You Can Trade series, it had encountered resistance under the median line (middle) of the medium term bearish channel (point 2 in red), and reversed after failing to hold above that level, and since returned lower.

If the upper line of the steep short term channel (point 3 in magenta) can be overcome, a bullish reversal should occur, whereas, if this resistance line continues to hold then Gold may target April's low near 1,268 before testing for support.

Below are examples of how to trade a bearish continuation or a bullish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1297.00 with a Limit to take profit @ 1306.00 and a stop-loss @ 1289.00 Risk/Reward Summary: Limit risk = +9.00 Profit / (-8.00) stop-loss risk = Gain to Loss ratio = 1.12

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1275.00 with a Limit to take profit @ 1269.00 and a stop-loss @ 1280.00 Risk/Reward Summary: Limit risk = 6.00 profit / (-5.0) Stop-loss risk = Gain to Loss Ratio = 1.20

Medium Term Daily Candle Chart:

golddaily may 1 2014 note

Medium Term Daily Candle Chart Zoomed Out:

golddaily may 1 2014 note unzoom

 

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