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CFD: Ideas You Can Trade- GOLD Medium Term Trend Still Bearish

Posted by Steven Hatzakis on Oct 22, 2014 3:50:00 AM

Gold:  Predominantly Bearish Trend Looming in Background Over Short Term Bullish Recovery

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 spot price of Gold, and is trading near 1,247.58 around time of publication today. 

In the last post about Gold in Ideas You Can Trade, in early September, support near 1240 had failed and the trend was described as having become more bearish. A Horizontal Support line had been drawn on 1182.70, a prior low - which was since barely reached and which provided a reversal of the bearish momentum enabling a recovery towards current levels.

Gold has recovered up a short term bullish support line, since the October 5th low of 1182.88, and still faces bearish pressure from the lower line of the medium term bearish channel (point 2 in red on chart below) which still remains to be the predominant trend theme. 

The pair is at a crossroads, with the 1300 level and 1182 both possible short term targets. So while the very short term momentum could stay bullish - sparked by volatility and global market fears - the bearish pressure is looming in the background, and thus the recovery should fade. 

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1256.00 with a Limit to take profit @ 1276.00 and a stop-loss @ 1239.00 Risk/Reward Summary: Limit risk = +20.00 Profit / (-17.00) stop-loss risk = Gain to Loss ratio = 1.17

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1238.00 with a Limit to take profit @ 1225.00 and a stop-loss @ 1250.00 Risk/Reward Summary: Limit risk =13.00 profit / (-12.00) Stop-loss risk = Gain to Loss Ratio = 1.08

Medium Term Daily Candle Chart Zoomed in:

 GoldDaily October 22 2014 zoom note


Medium Term Daily Candle Chart Zoomed out:

GoldDaily October 22 2014 note

Topics: commodity, CFD trading, commodities, precious metals, gold, metal, Bullion, $GLD, contract for difference, technical analysis, cfd, Metals, COMEX


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