Live Trade – XAU/USD (gold)

Filed under: Live Trades |

There is a trade setting up on the XAU/USD pair at the moment, which I have an order on that is almost being filled. I would like to talk you through the ins and outs of this setup right now.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will see the daily chart for the XAU/USD pair. What you can see here is that the pair is in a sideways trading range. I have marked the top and bottom ends of this trading range with green horizontal bands so that they can clearly be seen. These are marked by the maximum closing prices, with candlestick tails sticking out, as these were rejections.

 

As you can see, price is once again approaching the bottom of this trading range, so I was on the lookout for any bullish price action signals at this area. Therefore, when a nice bullish pin bar formed at this area, I put an order in to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the move, and a target of two and a half times the risk. I may increase this target if the market becomes particularly bullish, and move up my stop loss, as there is a potential for a target of five or six times the risk until the top end of the trading range comes into play. However, for now, I will see how this plays out in the short term. What is certain is that it is a strong level of support/resistance and the confluence of the pin bar right at this level significantly increase the chances of a turn. Trading is a game of probabilities, and even if it is a 55% chance of success, with a positive risk-reward, this is all that we need in the long term.

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