XAU/USD Gold Forex Signal: Bullish Advance Continues

Adam Lemon

Gold remains a buy as it hits new multi-month high prices.

Today’s Gold Signals

Risk 0.50% per trade.

Trades may only be taken before 5pm Tokyo time Tuesday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $1,903.05, $1,887.43, or $1,854.75.
  • Put the stop loss $0.50 below the local swing low.
  • Adjust the stop loss to break even once the trade is $12 in profit by price.
  • Remove 50% of the position as profit when the trade is $12 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

  • Short entry after a bullish price action reversal on the H1 time frame following the next touch of $1,950 or $2,000.
  • Put the stop loss $0.50 above the local swing high.
  • Adjust the stop loss to break even once the trade is $12 in profit by price.
  • Remove 50% of the position as profit when the trade is $12 in profit by price and leave the remainder of the position to ride.

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

Gold has advanced strongly, rising by more than 13% in value during April and May, which is a relatively large advance.

The bullish momentum of gold is not extremely strong, but it is firm and shows no real sign of slowing down, even as it breaks up to new 4-month high prices above $1,900.

Recent price action presents clear and obvious likely “stairstep” support levels: lines of resistance that were cleanly flipped to become support. We see three such levels nearby, with two of them sitting very close to the price at the time of writing.

The U.S. dollar is in a slow but still valid long-term bearish trend.

All these factors present a strong case to be bullish on gold.

There are no obvious areas of resistance ahead until the $1,950 area and of course above that there is the huge round number at $2,000 which is close to the all-time high price of gold in USD terms.

I will be happy to take a long trade if we get a bullish bounce at any of the key support levels identified above and will try to hold onto that trade until at least $1,950 – that level is unlikely to be reached today – unless we get a strong down day after trade entry, which would suggest a trade exit would be wise.

Gold

Regarding the USD, there are no data releases of high importance scheduled for today.

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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