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CFD: Ideas You Can Trade - Gold Reversion to Median Line of Down-Channel

Posted by Steven Hatzakis on Jul 20, 2015 11:08:00 AM
Gold: Steep drop today brings prices back to middle line of bearish channel - and longer term bullish support closing-in near 1065.00

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 1109.10 around time of publication today after falling sharply from it's opening near 1132.50 and making a small bounce from session lows of 1071.85.

Last time Gold was reviewed in Ideas You Can Trade was earlier in June - when bearish pressure was still the theme and a downside support area of 1150.00 was mentioned as a downside target.

Since then the trend was mostly sideways and then started to edge lower - and after support near the November 7th low around 1130.00 failed to hold over the last two days - today Gold fell very sharply.

Today's low coincides near the middle of the overall bearish channel (median line) where the trend has reverted to repeatedly - as can be see on the chart below. In addition, a longer term support line could help keep Gold above 1000.00 - unless that line is breached as well - in coming days/weeks (see green line on both charts below). A longer term monthly candle chart below shows the longer term trend.

The short term and medium term trend still remains bearish - although a recovery and sideways market could resume- before the next drop lower. Any recovery should be short-lived, unless the longer-term support line can reverse the recent medium term trend.

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1133.00 with a Limit to take profit @ 1149.00 and a stop-loss @ 1119.00 Risk/Reward Summary: Limit risk = +16.00 Profit / (-14.00) stop-loss risk = Gain to Loss ratio = 1.14 

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1069.00 with a Limit to take profit @ 1061.00 and a stop-loss @ 1177.00 Risk/Reward Summary: Limit risk = profit +8.00/ (-8.00) Stop-loss risk = Gain to Loss Ratio = 1.00

Medium Term Daily Candle Chart:

GoldDaily July 20 2015 note


Longer Term Monthly Candle Chart:

GoldMonthly July 20 2015 LONG TERM note

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


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