XAUUSD (GOLD) has formed a significant bearish engulfing pattern on the daily time frame. Price has now pulled back to allow a very low risk, high reward entry.
There is a very strong Bollinger Band squeeze which indicates that high volatility could come soon. Price appeared to make a fake break-out above the triangle.
A significant bearish engulfing candlestick, a very strong upper Bollinger Band out-break, and RSI divergence confirm this short trade setup.
A move down will confirm the start of a bearish impulse wave 3 due to the previous down-trend. Thin red lines are resistance levels, thicker red lines are support levels.
SL set above previous highs. TP set at strong support. 1:9 risk to reward ratio.
There is a very strong Bollinger Band squeeze which indicates that high volatility could come soon. Price appeared to make a fake break-out above the triangle.
A significant bearish engulfing candlestick, a very strong upper Bollinger Band out-break, and RSI divergence confirm this short trade setup.
A move down will confirm the start of a bearish impulse wave 3 due to the previous down-trend. Thin red lines are resistance levels, thicker red lines are support levels.
SL set above previous highs. TP set at strong support. 1:9 risk to reward ratio.
Note
Nearly identical short setup on Silver.Note
The top of the fake out (bull-trap) is exactly at the 38.2% fib retracement level when using the candle bodies. I am expecting further downside.Note
A bearish U.S. Dollar is driving gold slightly higher. Gold is still long-term bearish from a technical perspective. If we can see some strength in the DXY , I will expect further downside. For now, I will remain on the sidelines.Note
SL hit for a small loss... I have re-opened the trade and adjusted the SL.Silver is dropping quickly. I expect Gold to drop very soon.
Here is the new setup with the adjusted SL.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.