GOLD (XAU/USD): Trade Idea



Gold has been in a long-term bullish trend and has been trading within a range lately between the $1740 – $1670 levels. However, just recently, Price has broken out of this very range on the upside and has printed a nice price action Setup on a pullback to newly formed support $1745 and that indicates prices might want to resume the uptrend. The GOLD daily chart below:


In any price action Setup, the first thing to look for is if the factors of confluence are aligning with the trade idea generated. And if two or more factors of confluence are in-line, Setup is good to go.

So, now we will outline the factors of confluence that support our trade idea:

  1. Our trade direction (Buy) is in-line with the daily dominant Uptrend.
  2. Price has broken out of the range on the upside and has printed a price action setup on a pullback to the value area and horizontal support level.
  3. A well-formed Pin bar, protruding from surrounding price action.
  4. 8 & 21 Day EMA, crossover, and the slope indicates, that the daily uptrend might want to resume.

Based on those 4 confluent factors, we can take the Gold trade, ideally from the 50 – 60% retrace level of the Pin bar on the daily chart, with Stops, placed well below the horizontal support level. Upside targets the $1800 area or beyond.

Now, let’s go through the same Gold market from a different view. Price is also trading in a channel on the daily chart which can be seen below, and from that, we need to align this different tool with our existing bullish bias, so we can see a nice trend line holding prices above and ideally what we want to do is to trade in the direction of the channel and in this case the channel is showing an upward angle/bias, so we can look to buy from the 3rd hit on the trend-line within the channel (highlighted on the chart) and can target the upper extreme of the channel which also acts as channel resistance and is sitting at $1795 – $1800. The GOLD daily chart channel view:



Go Back Posted on June, 2020

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