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CFD: Ideas You Can Trade - Gold Recovers Yet Still Under Bearish Line

Posted by Steven Hatzakis on Feb 2, 2015 1:41:00 AM

Gold: Prices Consolidating After Pullback From 1300.00, and Bounce on 1257.00 After Last Week's Drop

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 1279.38 around time of publication today. 

Earlier in January in Ideas You Can Trade when Gold was last reviewed, an upside target near 1257.00 was predicted and since then had been reached with a new year-to-date (YTD) high touched just above 1300.00.  

Since that high on January 22nd, Gold has entered what appears to be a period of consolidating under a bearish resistance line (white line on chart below), with a very sharp one-day drop last Thursday - and where support was found near the prior resistance target of 1257.00 which is now acting as support. 

That support line enabled Gold to recover towards current levels, from last week's fall, however the precious metal is still under the influence of the bearish trend line and could further consolidate unless support above 1257 is maintained.  On the other hand if a break above the bearish line (white line on chart below) follows, then Gold could resume the medium term uptrend that it started at the beginning of 2015 (as it still remains in a longer-term downtrend and very-short-term bearish consolidation).

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1286.00 with a Limit to take profit @ 1302.00 and a stop-loss @ 1277.00 Risk/Reward Summary: Limit risk = +16.00 Profit / (-9.00) stop-loss risk = Gain to Loss ratio = 1.77

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1270.00 with a Limit to take profit @ 1258.00 and a stop-loss @ 1281.00 Risk/Reward Summary: Limit risk = profit +12.00/ (-11.00) Stop-loss risk = Gain to Loss Ratio = 1.09

Medium Term Daily Candle Chart:

GoldDaily February 2 2015 note

 

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

 

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