XULF Report 19th April
Soft corporate earnings so far for the first quarter is stripping away the euphoria in equity markets which, along with a rush from bargain hunters in the physical market, has helped gold climb back after Monday’s low.
The $1400 level is providing strong resistance. As you can see on this 1 hour chart price has reversed a number of times within a few dollars of this level. This resistance level is incidentally the neckline of the rather ugly double bottom that has formed. There are opportunities to both buy and short around this important level but it seems more likely price will penetrate and break through this resistance today according to the recent consolidating price action.
Zooming in on the 1 hour chart a pattern, looking like a merge between a bullish flag and a symmetrical triangle, has formed potentially providing a great set-up to open a long. Buy if price breaks through the top line of the flag or wait till a few dollars higher when it has firmly pushed through the $1400 resistance level. Place your stop just below the low point of this consolidation period at $1381. Or if that is too much risk use the Average True Range indicator which measures volatility in order to assess the most appropriate level to place your stop loss given capital constraints. Multiply the ATR by 1.5 to calculate your stop distance which is currently $10.20 away from the entry price. If a buy does present itself target $1420 over two trading sessions which is the 38.2% Fibonacci retracement level in reference to the daily chart.
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