Week 40: Gold trading plan

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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Gold trading plan:

Weekly Chart:
Right after the large volatility post FOMC, we saw Gold executed a large drop of 100 points for the week to shake out the weak hands.
This is mainly attributable to the reversal sign which we have seen in DXY (USD Basket) where it is likely for the “shortist” to be taking profits on the short DXY.
We have also noted that the critical longer term support of 1,900 range is broken and the current momentum of Gold has turned from neutral to bearish.
It would be important for us to monitor the direction of DXY in the upcoming week to ascertain if this situation is a typical dead cat bounce or a bullish reversal for DXY.
Gold’s weekly MACD and RSI are now pointing downwards where price could have further headwinds to be further down before any recovery.
Daily Chart:
From the daily chart, we could see a new short term downward trend being formed where the resistance is at 1,955 region as seen on 21st Sep.
While gold is currently supported at 1,845 range, we would need to be cautious for any further downside risks as the trend is down (next support would be 1,800 range).
MACD and RSI are both showing signs of bearish momentum.
The decline in Gold price is due to the bullish momentum of DXY (USD Basket) as mentioned above.
4 hours chart:
Gold is currently trading within the downward channel where opportunities are there for short term trading while waiting for gold to find its true bottom.
(i.e. short at the top of the downward channel and close short/small longs at the bottom of the channel).
While selling has eased off on Friday, we would expect more volatility to continue in the upcoming week/weeks as we are nearing elections.
Trading range would be 1,800 – 1910.
Below is Daily DXY chart for reference – we can see that it has tested the lower end of Fibonacci and bounced back.
This is a clear sign where short term “shortist” have taken profits.
(possibility of a dead cat bounce for us to look out)/

As no trading/investments are guarantee sure win, please do your own due diligence and always look at risk to reward and trade with guaranteed stop loss (private message me to know more).

Past article written on how to use guaranteed stop loss; do private message me in Telegram for me to refer you to IG.


Ernest Koh

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