XAU/USD Forex Gold Signal: Bullish Price Channel Intact

Adam Lemon

The support level at $1887.43 looks pivotal.

Last Monday’s gold signals produced a long trade from the bullish bounce from the support level identified at $1,903.50 but it only made $12 of profit so the trade broke even.

Today’s Gold Signals

Risk 0.50% per trade.

Trades must be entered prior to 5pm Tokyo time Thursday.

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 time frame following the next touch of $1,887.43, $1,879.94, or $1,854.75.
  • Place the stop loss $0.50 below the local swing low.
  • Move the stop loss to break even once the trade is $12 in profit by price.
  • Take off 50% of the position as profit when the trade is $12 in profit by price and leave the remainder of the position to run.

Short Trade Ideas

  • Short entry 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.
  • Place the stop loss $0.50 above the local swing high.
  • Move the stop loss to break even once the trade is $12 in profit by price.
  • Take off 50% of the position as profit when the trade is $12 in profit by price 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.

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XAU/USD Analysis

I wrote last Monday that there were several factors which taken together presented a strong case to be bullish on Gold.

This was a good call as the price rose that day by a maximum of $12.

The price reached a new 4-month high price yesterday, but had a down day, flipping the former support level at about $1,903 to become a new lower resistance level.

Despite this bearish sign, the price chart below shows that the symmetrical bullish price channel which has contained the price effectively over several days remains intact.

Therefore, we can say for now that until the support level just below the lower trend line of this price channel breaks down, gold is still in a bullish trend, although it is starting to look somewhat shaky.

I am therefore prepared to enter another long trade if we get a firm bullish bounce at $1,887.43, or if the price can make two consecutive hourly closes above the resistance level at $1,910.24.

Gold still has plenty of long-term bullish momentum that should encourage bulls to be brave despite the down day yesterday.

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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