Live Trade Number 17 – ANALYSIS and RESULT

Filed under: Live Trades |

Well, our seventeenth live trade did not come off as we’d hoped. However, I believe that the setup was good and that we should have been taking the trade. With this in mind, I would like to take you through the ins and outs of the trade.

 

Figure 1.

Let’s begin by looking at Figure 1, which is the daily chart for the XAU/USD pair, more commonly known as gold. Gold is renowned for being a bull market, but just recently in the past few months, it has turned quite bearish. The moving averages have crossed over and the short-mid term trend is most certainly down. There was also a level around 1606, which was a great level of support/resistance on the daily chart, and price had been retracing back up to this level once again.

 

Figure 2.

If you now look at Figure 2, you will see the 4-hour chart for the XAU/USD pair. What you will see here is that once prices entered this green band, which marked our area of support/resistance, a very nice bearish engulfing pattern formed. This signaled that a move down was imminent, and I set a short order at a 50% retracement of the bearish candle, with a stop loss just a few pips above the high of the move, and a target of two times my risk.

 

Figure 3.

However, Figure 3 shows that our stop loss was hit rather quickly. There was a huge spike in price on the 1-hour chart, which moved very quickly indeed, so perhaps there was some kind of news story released which caused the movement. Anyway, it was not to be and we must take the losers as a part of the process.

 

Trade 17 = -106.92

 

Total Profit/Loss for test = +393.62 GBP

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