Gold Shine Begin to Haze – Stronger Dollar In Play!
What's up, traders. Yesterday, our forex trading signal on Gold to buy above $1,287 to target $1,300 was quite a success. But what's more exciting is that we closed our position at $1,293 and that's exactly where Gold reversed to continue its bearish momentum.
Major Reason Behind Bearish Gold
Most of the bearish trend is fueled by the slight bullishness in the USD. As we know, there is a strong negative correlation between Gold and the Buck. Thus, the increased value of the USD makes the precious metal costly.
Yesterday, the expectations raised that tax reform will be performed earlier rather than later backing a move higher in the dollar, weighing on the Gold prices during the New York trading session.
The U.S. Congress Republicans uncovered a tax proposal that would cut taxes on businesses. This sentiment increases the business activity in the country and also attracts the new investment, thus resulting in increased demand of the Buck and price.
Technical Outlook – Gold
Technically the Gold is following a strong bearish trend especially after the breakage of $1,287 (our initial buy entry). As discussed in our previous update, Sept. 27: Top Trade Setups For U.S. Session the Gold has finally reached to $1,282.
Gold – 2- Hour Chart
Gold – 2- Hour Chart For now, the Gold is heavily oversold and needs to retrace back up until $1,289 and $1,294. But the candles are suggesting no signal of reversal.
Gold – Trading Idea
Based on above technicals, I'm hesitating to enter my buy position above $1,281 as $1,286 seems to be a good selling level. Yet, we can't take a risk of entering a sell position at the lowest levels. The idea is to stay in buy above $1,272 with the stop below $1,269. Whereas, we can risk selling below $1,292.
Good luck fellas, and make sure to move your stops at breakeven once the trades enter sufficient profit.
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