Live Trade Result – Gold

Filed under: Live Trades |

I have had a trade on the XAU/USD pair come to fruition today, which for those of you that don’t know is the pair for gold and the United States dollar. To begin with, take a look at Figure 1. This is the daily chart for the XAU/USD pair and this is the timeframe that we use to assess the trend and to mark in any significant areas of support and resistance. As you can see, the 8-day exponential moving average has crossed below the 21-day exponential moving average, and the pair has moved from bullish to bearish. The pair has visibly been moving down over the past few weeks, before pulling back to a 50% Fibonacci retracement area, which is also a strong level of support/resistance (marked in with a green band). So, when price reached this confluent area, I was on the lookout for any bearish price action signals.


Figure 1.

If you now look at Figure 2, you will see the 4-hour chart for the same XAU/USD pair. What you can see here is that price formed a nice bearish engulfing pattern at our area of support/resistance, followed by a well-defined pin bar. It was here that I put an order in to go short at a 50% retracement of the pin bar, with a stop loss placed just a few pips above the high of the pin bar, and a split target set of one and two times my risk.

Figure 2.


As you can see, the order was filled, and although price consolidated at the level for a while, it did eventually break downwards and reach both our targets for a very nice 1.3% rise on the bank. Had we not split out target, that would have been a 2% rise on the bank, but hopefully, this system will come into its own during periods of drawdown.

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