Gold / XAUUSD / GC - Ascending triangle breakout imminent
I made an about face on my bias of gold yesterday where I flipped from bearish to bullish. This doesn't mean I am indecisive or have multiple personalities, rather it was due to watching what price was telling me. Don't ever be afraid to change your opinion of a setup on a dime. Price action and the "price story" is always changing, and thus our bias' of that instrument could change as well.
The setup we are looking at is a bullish ascending triangle reversal pattern. I entered long yesterday evening (perhaps a little prematurely) but price has continued to show buying strength on each test of the lower portion of the ascending triangle which is what we want to see. Given how price aggressively recovered above the #1 ascending triangle, I think a bullish breakout is likely. Remember folks, likely doesn't = 100%. Never bet the farm! To trade we need capital, so capital preservation needs to be a top priority. We preserve our capital by not over risking on individual trades.
If you are in this trade or eventually enter on a future buy signal, the nearest term resistance is in the 1355-1360 range. I will personally be dynamically managing my trades and may get out before that level is reached or stay in after price breaks through(assuming this is how it plays out!), but that level is a nice, common sense level for those of you who are more mechanical.
The setup we are looking at is a bullish ascending triangle reversal pattern. I entered long yesterday evening (perhaps a little prematurely) but price has continued to show buying strength on each test of the lower portion of the ascending triangle which is what we want to see. Given how price aggressively recovered above the #1 ascending triangle, I think a bullish breakout is likely. Remember folks, likely doesn't = 100%. Never bet the farm! To trade we need capital, so capital preservation needs to be a top priority. We preserve our capital by not over risking on individual trades.
If you are in this trade or eventually enter on a future buy signal, the nearest term resistance is in the 1355-1360 range. I will personally be dynamically managing my trades and may get out before that level is reached or stay in after price breaks through(assuming this is how it plays out!), but that level is a nice, common sense level for those of you who are more mechanical.
Comment:
Previous Analysis
Trade active:
Be very cautious and watching for any price reversal signals. Remember, this is a counter trend breakout which are susceptible to false breaks. Price has broken out and reach a high of about 1313, but has pull back about half of this amount. If price closes below 1306 on the daily chart this may be a red flag worth closing the position and protecting against losses. This has not happened yet and there is a lot of time left in the day, but be prudent and watching that price action!
Trade active:
I closed half of my position last night for a small profit, due to the weakness we saw in gold yesterday. Price did not close below my threshold of 106 for me to close my entire position, but it was close enough that I decided to close half of my position as a defensive tactic in case of a sharp drop today. That turned out to be a very good move since that is exactly what happened today. My other half of the trade is still open and won't be closed until we get close to end of day. Overall my loss is currently about -0.5% of my overall account balance. Keeping the original trade small and then closing half of it last night was key in minimizing any damage from today's sharp drop.
