Gold Price and Where it is likely to go next! (XAUUSD Trade)

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
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Hey Traders, I am seeing some selling strength in Gold/Silver right now. We are still in a Weekly downtrend so I will be looking to take a small short position if we can get another false breakout to retest the level highlighted in orange on the chart. If we do get some selling and the price does pullback as I expect, I will be looking for Long positions only if a higher low is created on the daily chart . I will be looking for short term buying opportunities if price falls into the yellow zone on the chart and my conditions for entry are met. If price does not violate the bottom of the yellow zone and we begin to get buying signals, then we will have another higher low on the chart and that may be another good trading opportunity! I will be sure to post an idea regarding that trade when the time comes but for now I am looking to enter short if we get another false breakout to retest the orange zone. The risk is minimal and the trade has a nice risk/reward, (1.6 for Target 1 and about 2.6 for target 2). I do expect a pop up in price and this is one of the reasons I have my entry where it is.

Reasons to enter Short if price reaches orange zone:

1) We have a lot of selling at this price level. Long wicks can tell you a lot about price if interpreted correctly, You cannot use them alone however they are a very good tell of where price may go next at major levels of support and resistance .

2) Bollinger Bands are contracting (Pointing towards each other). This is usually a good indication that a decent sized move is about to occur. We do not know which direction price will move but we do know that this is a very accurate indication for, near future Volatility/Movement. I will be watching closely to see how price reacts around the 20 period SMA , this will help me manage my trade.

3) Price has retested this resistance level multiple times over the past few months. Every time, price has been rejected. We also have a double top formation (according to my criteria/conditions for a double top ).

4) Stochastics are overbought and MACD histogram is falling.

5) Price is below the 200 period SMA , I will be watching for a close above the 200 day SMA , or another rejection that causes a pullback.

6) Important Fib Retracement levels of the recent move are clustered in the area of the yellow zone (pull fib retracement tool from the body of the candles). I will use these Fib levels to assist in analyzing strength in moves if price drops into that price level.

If I am wrong and price closes above resistance, I will not be buying until we see a double bottom or some type of support setup.

I hope this was helpful and I will update this as price progresses over the next few days. Feel free to comment with your analysis or any questions regarding this setup. Good luck trading!
Trade closed: stop reached: Hey Traders, I was expecting Gold/Silver to bounce higher (as mentioned above) but unfortunately it bounced higher than I was expecting. My stop was hit last night! I do believe we will get a follow through due to the strength of the breakout however I am expecting price to retest resistance that should now turn into support. if we do not break below that level then I believe we will have a nice Long opportunity. Good luck trading!
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