Trade Example – Gold

Filed under: Learn Forex Trading |

There was a nice trade setup on the XAU/USD (gold) pair that I missed yesterday, so I would like to talk you through this possible setup right now.

 

Figure 1.

If you take a look at Figure 1, you will see the 4-hour chart for the XAU/USD pair. The green band at the top of this chart is a level that I have drawn in to make a relevant level of support/resistance. This is a very strong level and a level that I had been watching on both the daily and intraday charts.

 

What you can see is that price began to stall at this level, making four inside bars before forming a nice bearish pin bar that came off of our level of support/resistance. This would have been a nice opportunity 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 with a target set of two times our risk. As you can see, this order would have been filled, and price has since moved down away from this strong level of support/resistance. Unfortunately, due to other commitments, I missed this one. However, the good thing about the forex market is that it is always open (except the weekends of course!) and there are always more opportunities in the offing.

 

Just for the record, I did have a live trade on the GBP/USD pair yesterday that failed, which therefore puts us at around a -1% loss for the month; so hopefully we will get a couple of more winners towards the end of the month that will leave us in positive territory for November. I do not like negative months, but as long as it stays at that level, then it is manageable.

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