The Daily Trade – Day 43

Filed under: Learn Forex Trading |

Trade Number 43 – XAU/USD (Gold) 1-Hour Chart

To begin with, I need to tell you that the trade from yesterday has not yet reached a conclusion, so I will put the result of that on hold until we either hit our stop loss or reach our profit target.

 

Figure 1.

As for today, I have a very interesting trade example for you – so let’s get right to it. If you look at Figure 1., which is the daily chart for XAU/USD (gold), you will see that there has been a very nice, neat, change of polarity, with old resistance becoming new support. This is a very good place to be looking for any price action setups.

 

Figure 2.

Now, if you look at Figure 2., you will see that a very nice bullish engulfing pattern emerged, which I actually took as a trade. Unfortunately, this trade was going well before there was a massive pin bar, which stopped me out. This pin bar reinforced the strength of this zone though, so we could have thought about having another stab at it. As this pin bar was rather long, our buy limit entry could have been on a 50% retrace of this pin bar, which you can see would have been filled. I see this kind of trade as being a little bit more risky, so with the extra risk, had I taken it, I would have gone for a risk-reward of 1:3, to justify that risk.

 

Now, turning to Figure 3., you will see that this zone was respected very well and that price moved up nicely, to resume this strong long-term up-trend in gold. We would have reached our target for a 3% rise on our bank. The only thing is, I wasn’t brave enough to take this trade having already had one failed attempt at this level!

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