As this market analysis is for educational purposes, a previous possible scenario will be debated.
On 12.03.2019 a scenario in Gold was discussed where a possible new upward move was developing. Later the same day the critical resistance level at 1300.786 was broken and a long position could have been engaged with possible targets projected as well as a possible capital protection level. It is critical to know all these levels BEFORE any position is anticipated because no one knows for sure what the market will really do. What we can however know is the risk we will take and how to manage it.
After a long position could have been engaged, demand overwhelmed supply and the resulting upward momentum caused the first possible target of 1307.183 to be reached during the same day. If partial gains were taken at that point it meant that very little risk remained and the rest of the position could be kept open so the next possible targets might be attained. It is important to realize that the main focus of trading is risk management and even reaching targets is part of an overall risk management strategy. The goal of course being a net gain over a series of trades. A low risk / high reward ratio in every trade taken makes this possible.
The next possible target of 1317.534 was reached on the 21st of March and if partial profits was again taken, then a moderate net positive situation was possible for the overall trade even though a part of the position was still open in case the uptrend continued. This puts us in a very favorable position.
Two likely scenarios are now possible.
If the uptrend continues then our third and last potential target may be reached, or the uptrend may reverse and then the last portion of our trade will be taken off and a possible new position in the direction of the new trend may be anticipated.
On 12.03.2019 a scenario in Gold was discussed where a possible new upward move was developing. Later the same day the critical resistance level at 1300.786 was broken and a long position could have been engaged with possible targets projected as well as a possible capital protection level. It is critical to know all these levels BEFORE any position is anticipated because no one knows for sure what the market will really do. What we can however know is the risk we will take and how to manage it.
After a long position could have been engaged, demand overwhelmed supply and the resulting upward momentum caused the first possible target of 1307.183 to be reached during the same day. If partial gains were taken at that point it meant that very little risk remained and the rest of the position could be kept open so the next possible targets might be attained. It is important to realize that the main focus of trading is risk management and even reaching targets is part of an overall risk management strategy. The goal of course being a net gain over a series of trades. A low risk / high reward ratio in every trade taken makes this possible.
The next possible target of 1317.534 was reached on the 21st of March and if partial profits was again taken, then a moderate net positive situation was possible for the overall trade even though a part of the position was still open in case the uptrend continued. This puts us in a very favorable position.
Two likely scenarios are now possible.
If the uptrend continues then our third and last potential target may be reached, or the uptrend may reverse and then the last portion of our trade will be taken off and a possible new position in the direction of the new trend may be anticipated.