Gold: Dead-Cat-Bounce on 1163.20 Barely Gaining Ground After Last Weeks Steep Fall From 1200.00
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 the precious metal Gold, and is trading near 1170.50 around time of publication today.
Last time Gold was reviewed in Ideas You Can Trade earlier this month, what appeared to be a false-breakout had occurred, and Gold did indeed subsequently move lower with a sharp fall last Friday when support around 1200.00 was lost.
Since bouncing on 1163.20 last Friday - at the session low, Gold hasn't recovered much (like a dead-cat-bounce) and looks likely to make a lower-low under 1160.00 soon - unless a recovery towards the steep bearish resistance line resumes (white line on chart below - which had been guiding the recent bearish trend) although this latter scenario seems less likely as of now as the recovery seems hampered.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1176.50 with a Limit to take profit @ 1182.20 and a stop-loss @ 1173.00 Risk/Reward Summary: Limit risk = +5.70 Profit / (-3.50) stop-loss risk = Gain to Loss ratio = 1.63
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1162.95 with a Limit to take profit @ 1157.95 and a stop-loss @ 1165.80 Risk/Reward Summary: Limit risk = profit +5.00/ (-2.85) Stop-loss risk = Gain to Loss Ratio = 1.75
Medium Term Daily Candle Chart: