Live Trade – XAU/USD (gold)

Filed under: Live Trades |

 

I have a trade currently in play on the XAU/USD pair, which for those of you that don’t know is the pair for gold.

 

To begin with, take a look at Figure 1. This is the daily chart for the XAU/USD pair, and it is the only timeframe that we will actually need to look at on this particular occasion, as all of the information that we need is visible in this chart.

 

Figure 1.

Figure 1.

What you can see is that the pair has been in a downtrend, with the chart visibly moving down from left to right. Price has recently pulled back to a 50% Fibonacci retracement area, which also happens to be a very good level of support/resistance (marked with a horizontal green band). This provides us with a good, confluent area to look at. Price has then rejected this area once with a long upper shadow, before forming a very nice little pin bar. It was at the close of this pin bar that I put an order in to go short at a 50% retracement of this pin bar, with a stop loss placed just a few pips above the high of the move, and a target set of two and a half times the risk.

 

I do have one or two reservations about this trade, but this is overshadowed by the strength of the setup with regards to the support/resistance level, the 50% Fibonacci retracement creating some confluence, and the price action setup. However, a little doubt is there due to the 8-day exponential moving average recently crossing above the 21-day exponential moving average, showing some bullish momentum. Hopefully, the level of support/resistance will be strong enough as to resist any move higher. That’s it for today, and I’ll be back with more tomorrow.

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