Live Trade – XAU/USD (Result)

Filed under: Live Trades |

I discussed a live trade setup on the XAU/USD forex currency pair a few days ago, and I have now closed this trade for a breakeven result. I would like to talk you through how this result occurred right now.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will be reminded of the trade setup in question. This is the daily chart for the XAU/USD pair (the pair for gold and the US dollar), and it is the only timeframe that I looked at for this particular trade. What you can see is that there is an area of support/resistance marked in at the top of the chart, and price had reacted to this level by forming a bearish engulfing pattern. What I did was to put an order in to go short at the break of the low of this level, with a stop loss placed just a few pips above the high of the move. This order was filled the following day, and I had an initial target of just two times the risk – as the stop loss was quite wide due to entering at the break of the low of the candle rather than a 50% retracement entry. The reason why I didn’t go with the 50% retracement entry on this occasion was because of the slight lower shadow on the bearish candle, and wanting some added confirmation that the bearish move would continue.

 

For the last five trading days, this pair has been moving sideways in a consolidating pattern. As such, I wanted out of this trade to free up capital for other trades, so I moved my target to breakeven, which was hit for a breakeven trade. Sometimes, if a move does not happen quickly, it is best to be out of the trade, and this is what I felt on this occasion – and I am now happy to be out of this one.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>