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CFD: Ideas You Can Trade- Gold Preps For Another Pullback

Posted by Steven Hatzakis on Nov 28, 2014 1:43:00 AM

Gold: Last Three Days Indicate Recovery is Over, and Trend Theme May Repeat with Another Drop Towards 1,130.00

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 1,187.08 around time of publication today. 

In late October in the last post about Gold in Ideas You Can Trade, the trend was described as predominantly bearish and looming over a short term recovery that had occurred. Since then the bearish trend resumed and reached a low of 1131.23 in early November before recovering back towards current levels. Gold however had encountered resistance under the medium term bearish channel (point 2 in red on chart) which is still the main guiding theme, and is lower in recent days. 

Accordingly, the pullback of the last three trading sessions indicates that Gold looks poised to make a similar pullback to that which followed the last post.

Unless the medium term bearish line is recovered, 1130.00 may be the next downside target or a short term bullish support line (point 4 on chart below) that has been drawn from this month's low parallel to a previous such line could act as as support near 1153.00. Lastly, support near today's low of 1182.00 could be the last line of defense to prevent a bearish continuation.

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1191.00 with a Limit to take profit @ 1203.00 and a stop-loss @ 1179.00 Risk/Reward Summary: Limit risk = +12.00 Profit / (-12.00) stop-loss risk = Gain to Loss ratio = 1.00

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1180.00 with a Limit to take profit @ 1161.00 and a stop-loss @ 1199.00 Risk/Reward Summary: Limit risk =19.00 profit / (-19.00) Stop-loss risk = Gain to Loss Ratio = 1.00

Medium Term Daily Candle Chart Zoomed in:

GoldDaily November 28 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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