Gold Forex Signal: Bullish Price Channel Remains Intact

Adam Lemon

The support level at $1887.43 looks pivotal.

Yesterday’s Gold signals were not triggered, as there was no bearish price action when the price first reached the resistance level identified at $1,903.86.

Today’s Gold Signals

Risk 0.50% per trade.

Trades may only be entered prior to 5pm Tokyo time Friday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $1,900.88, $1,887.43, $1,879.94, 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

  • Go short after a bullish price action reversal on the H1 time frame following the next touch of $1,903.86, $1,910.26, $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

I wrote yesterday that as the symmetrical bullish price channel which had contained the price effectively over several days remained intact, gold was still looking interesting as a potential buy just below the bottom of the price channel at $1,887.43, or following a convincing breakout above the resistance level at $1,910.24.

The price did not reach either of these levels, but the bullish ascending price channel did hold when its lower trend line was tested by the gold price, resulting in a new multi-month high New York closing price yesterday, which is typically a bullish sign.

Despite these bullish factors, bulls should be cautious, as we see the price potentially completing the final leg of a bearish head and shoulders pattern after repeatedly rejecting the resistance level at $1,910.24.

Gold should be interesting to trade as it will probably either continue to rise in line with its long-term bullish momentum and ascending price channel or break down quite dramatically with a sharp fall. Either potential set up is tradable, although probability likely favours a continuation of the bullish movement. However, as any downwards move will likely be sharp, there could be a good reward to risk ratio on such a short trade.

I will be happy to enter a long trade if the price makes a firm bullish reversal soon at the support level of $1,900.88, or at $1,887.43.

Gold

Concerning the USD, there will be a release of the ADP non-farm employment change forecast at 1:15pm London time, followed by unemployment claims at 1:30pm and ISM Services PMI data at 3pm.

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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