Gold Spot / U.S. DollarEducation
GOLD buy trade setup using price action, how far can it go???
It has been said ever since people were allowed to trade to "trade with the trend" and "the trend is your friend". Although there is logic to this the market unfortunately doesn't always trend and in fact spends most of its time in ranges and channels.
The market environment changes all the time and it's why so many traders struggle with their trading because they do not understand what market environment they're currently in. Price action traders can have an advantage in this regard because they want to see the structure that the price action has laid out as the leading indicator of where price could potentially go next.
As you can see from the 15 Minute chart on Gold, it has been in roughly a $22.00 range for around the last 2 weeks. Although it has been in a longer term uptrend in general, using ranges can help you a lot to work out a higher potential level to enter, while also managing your downside risk.
What we can see is a bullish head & shoulders pattern complete right at the lows of the range which can be seen on the higher time frames, why we like the position of this specific price pattern is because, not only is it pointing to the right side of the larger trend direction which can enable you to jump in on the move. You also get a location that if you are wrong then your stop loss can be placed just below the pattern which also would also lie under the range floor so you can manage smaller risk on this trade.
If you missed this setup then by being patient, price ends up showing you another opportunity with the same bullish head & shoulder pattern that completes just after the initial drive higher from the lows.
When trading any price pattern you should always wait for it to complete first without jumping in too early, but it's the higher inner trend line that we like to use (in the case of a bullish pattern) as our entry point as this can help show more strength in the pattern while also precisely showing you where to enter on the top side retest marked with green arrows.
Even if price doesn't continue in the longer term trend, you can initially target the top of the range and potentially scale out a percentage of your trade to lock in some profits.
We will be keeping a close eye on Gold and watch for any pullbacks that can allow for another bullish price pattern to form potentially indicating another opportunity for a manageable trade.
The market environment changes all the time and it's why so many traders struggle with their trading because they do not understand what market environment they're currently in. Price action traders can have an advantage in this regard because they want to see the structure that the price action has laid out as the leading indicator of where price could potentially go next.
As you can see from the 15 Minute chart on Gold, it has been in roughly a $22.00 range for around the last 2 weeks. Although it has been in a longer term uptrend in general, using ranges can help you a lot to work out a higher potential level to enter, while also managing your downside risk.
What we can see is a bullish head & shoulders pattern complete right at the lows of the range which can be seen on the higher time frames, why we like the position of this specific price pattern is because, not only is it pointing to the right side of the larger trend direction which can enable you to jump in on the move. You also get a location that if you are wrong then your stop loss can be placed just below the pattern which also would also lie under the range floor so you can manage smaller risk on this trade.
If you missed this setup then by being patient, price ends up showing you another opportunity with the same bullish head & shoulder pattern that completes just after the initial drive higher from the lows.
When trading any price pattern you should always wait for it to complete first without jumping in too early, but it's the higher inner trend line that we like to use (in the case of a bullish pattern) as our entry point as this can help show more strength in the pattern while also precisely showing you where to enter on the top side retest marked with green arrows.
Even if price doesn't continue in the longer term trend, you can initially target the top of the range and potentially scale out a percentage of your trade to lock in some profits.
We will be keeping a close eye on Gold and watch for any pullbacks that can allow for another bullish price pattern to form potentially indicating another opportunity for a manageable trade.
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