Gold Signal: Strong support at $1881

Adam Lemon

Gold: Ignore the consolidating triangle pattern

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Today’s Gold Signals

Risk 0.75% per trade.

Trades may only be taken between 8am and 5pm New York time today.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1913 or $1920.
  • Put the stop loss $10 above the recent swing high.
  • Move the stop loss to break even once the trade is $20 in profit.
  • Remove 50% of the position as profit when the price reaches $20 in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1881.
  • Put the stop loss $10 below the recent swing low.
  • Move the stop loss to break even once the trade is $20 in profit.
  • Remove 50% of the position as profit when the price reaches $20 in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

XAU/USD Analysis

For the past few decades, Gold has generally been better bought than sold.

Although it has been a while since the price of Gold broke to new all-time highs in the U.S. Dollar as well as in other major currencies, technically we still have a long-term bullish trend in force, with the price currently higher than it was both three and six months ago.

Therefore, although the price is not breaking to new long-term highs, which is when Gold can be bought most efficiently, there are still good reasons for looking more towards the bullish than the bearish side. After all, research shows that the price of Gold in USD tends to be quite positively correlated with the performance of the S&P 500 stock market index, and there is no doubt that we still see a bull market in stocks.

Technically, it will be best to ignore the consolidating triangle formation shown in the price chart below as it looks relatively unreliable.

The best value is likely to lie in taking a swing trade long from a bullish rejection of the lower boundary of the multi-day range at about $1881.

Shorter-term traders might also look to sell Gold at a bearish reversal at $1912 or $1920, with $1912 looking likely to be the stronger level.

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Regarding the USD, there will be a release of Durable Goods Orders at 12:30pm London time followed by Consumer Confidence data at 2pm.

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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