Live Trade – XAU/USD (Gold)

Filed under: Live Trades |

I have just had a live trade on the XAU/USD pair (the pair for gold), and I would like to talk you through this setup by way of an example right now.

Figure 1.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the XAU/USD pair. What you will see here is that price is currently stuck in a trading range, and that price is once again approaching the bottom end of that trading range. Having made it this far, we would expect price to at least reach the bottom end of this trading range.

 

Figure 2.

Figure 2.

Figure 2 shows the 4-hour chart for the same XAU/USD pair. What you can see here, is that price has been stepping down, and that a very nice pin bar formed after one of these steps. This can be considered to be a minor area of support/resistance (marked with a very thin green band).

 

Figure 3.

Figure 3.

What I did after the close of this pin bar was to 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 target set of two times the risk. Figure 3 shows that the order was filled, but that the trade was not successful.

 

In hindsight, the level of support/resistance that was used was a little weak, and was only a very minor area of support. It was with the recent trend, and the pin bar was very nicely defined, but other than this, there was not a great deal of confluence, and as such, I perhaps should have stepped aside on this one. I’m afraid that it is one of those that we will have to learn from. More tomorrow…

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