A Possible Breakout Trade Setup In Gold
Shain Vernier • 1 min read
The last three months have been a wild ride for gold. In the midst of a sustained bull market in equities, bullion has continued to post consistent gains. Even though Friday was not a good session for bulls, long-term positive sentiment remains intact. This morning’s action has shown buyers to be present at several key support levels.
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April gold futures are currently consolidating inside of Friday’s massive range. It appears as if indecision is the order of the day as traders duke it out near the Daily SMA.
From a purely technical perspective, a bullish bias towards gold remains valid. Price is firmly above the 38% Fibonacci retracement of the current uptrend. In addition, bearish action was not sustained beneath support.
Here are the key support levels for the remainder of the session:
- Support(1): 20 Day EMA, 1337.0
- Support(2): Daily SMA, 1335.4
- Support(3): Bollinger MP, 1333.7
Bottom Line: A breakout scalp from beneath Friday’s low is a great way to play a washout of today’s early market. Sells from 1330.0 should attract heavy participation, driving price south 8-15 ticks relatively quickly. Using a 1:1 R/R management plan, this trade is an affordable way to grab a few ticks in a hot technical area.
As of this writing, gold is rotating in a tight range well above the 1330.0 level. Even though the trade going live today is unlikely, the setup is too good not to mention.