Gold: Downside Support Target Reached, Now Being Tested
The daily candle chart below shows the price history of Gold over the medium term. This Contract for Difference (CFD) aims to track the underlying price of the precious metal Gold, and is trading near 1,236.70 around time of publication today.
Last time Gold was covered earlier this month, the trend was described as still bearish, in the last post in the Ideas You Can Trade series. Since then Gold continued lower reaching a support target near 1240.00 (around current levels), after recovering from session lows of 1,232.00 earlier today.
Now that Gold has entered more bearish territory, a swift move lower could follow, while a short term bullish recovery could be minimal before returning again lower, as the prospects for the metal still look bearish.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1247.00 with a Limit to take profit @ 1265.00 and a stop-loss @ 1232.00 Risk/Reward Summary: Limit risk = +18.00 Profit / (-15.00) stop-loss risk = Gain to Loss ratio = 1.20
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1229.00 with a Limit to take profit @ 1201.00 and a stop-loss @ 1251.00 Risk/Reward Summary: Limit risk =28.00 profit / (-22.00) Stop-loss risk = Gain to Loss Ratio = 1. 27
Medium Term Daily Candle Chart Zoomed in:
Medium Term Daily Candle Chart Zoomed out: