Gold: 1,240 Next Stop if Long Term Bearish Resistance is Breached
The daily candle chart below shows the price history of Gold over the medium term, and trading near 1,271.80 around time of publication today. This Contract for Difference (CFD) aims to track the underlying price of the precious metal Gold.
Last time Gold was covered in late June in the Ideas You Can Trade series, a break above 1,300 enabled a push higher where 1,345 was reached in mid-July before prices returned towards current levels.
With Gold still caught in the downtrend of the bearish support line (point 2 in red on chart below), prices may continue lower with support on that bearish line near the 1,250 area. Further support exists on 1240.25 near the low reached in early June.
Over the last two days Gold has attempted to trade higher but only marginally, and still faces considerable downside pressure unless a bullish recovery follows with a bounce higher from current levels.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1276.00 with a Limit to take profit @ 1298.00 and a stop-loss @ 1255.00 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” @ 1259.00 with a Limit to take profit @ 1243.00 and a stop-loss @ 1274.00 Risk/Reward Summary: Limit risk =16.00 profit / (-15.00) Stop-loss risk = Gain to Loss Ratio = 1.06
Medium Term Daily Candle Chart zoomed in: