Live Trade – XAU/USD (gold)

Filed under: Live Trades |
Figure 1.

Figure 1.

I currently have a live trade order on the XAU/USD pair, which you should know by now is the pair for gold (the exchange rate between gold and the United States dollar to be precise). If you take a look at Figure 1, you will see the weekly chart for the XAU/USD pair. I am using this to look for any significant long-term levels of support/resistance, and there is clearly a level near the bottom of this chart that has been acting as support for some time. Gold is a pair that traditional moves up, but for the past few months or more, it has been in something of a sideways trading range, with price now currently reaching the bottom end of this trading range. Therefore, a lot of traders and investors might be looking to buy into the market at this level.

 

Figure 2.

Figure 2.

If you now look at Figure 2, you will see the daily chart for the same XAU/USD pair. What you can see is that price really stopped moving at our level of support, and there was a little bounce before moving back down to this level and testing it once again. As you can see, price has not been able to break through this level, and a nice bullish pin bar has formed. What you could do here is to put an order in now at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the pin bar, and a target set of four times the risk, which would take us to around the high of the bounce. These would be a very good risk-reward setup, and although I have a few reservations about this setup, a risk-reward ratio of 1:4 would certainly make it worthwhile.

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