Well, here we are again, Gold trading just above the 1250 mark. Today was a solid day down, with Gold trading 16.7 points off the opening to close at 1253. We have come right to the top of this support area that was last seen on June 24, the day the British approved Brexit, and the day when Gold rallied 108 points in 1 day!. It's amazing isn't it how these cycles play out; 3 and a half months later and we are on the verge of another volatile day, but this time its Non Farm Payroll Friday.
As you can see in the chart, we have been riding the extreme edge of the Bollinger Bands. And as we know, this is not a sustainable situation as price will almost always pull back from such extremes. You can also see on the Stoch RSI that the green signal line has final crossed over the magenta line. While this doesn't necessarily mean that the down cycle is over and that price will reverse, it does give us a clue that it might happen soon. And given Non Farm Payroll day, the safest play might be to go to cash and protect your profits.
To recap, the 3 main factors to thinking that the pullback might be over are:
Price has spent 3 days on the outside edge of the outer Bollinger Band
Price is right at the upper edge of a major support zone
Stoch RSI signal line has started to cross above the magenta line
Following my own advise, I am closing all of my current short position except for 1 contract which will be a runner. With the stop at set at break even, it's a very safe play.
Safe Trading and Protect those Profits!
Trade closed manually
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Update: I closed my remaining short position on Gold this morning after the NFP. Overall it was a very profitable trade!