Bullish trendline on the 4 hour chart resulted in a strong sell-off – XULF Report 19/06

XULF Report

As we approach the Fed’s policy statement and Bernanke’s question and answer session at the FOMC’s press conference equities have climbed higher on mounting speculation the Fed will keep the current level of bond-buying unchanged and interest rates near zero. However gold didn’t benefit and the break of the bullish trendline on the 4 hour chart resulted in a strong sell-off.

As you can see the bullish trendline break produced a sharp decline and since reaching the low of $1360.89 price has interacted with the 38.2% retracement level at $1370.20 and began another leg of the decline. The bullish hammer indicates there may be support again at $1360.89 so traders shorting need to be mindful there could be a flurry of buy orders at this level. Place a short stop at $1371 which is just above the 38.2% Fib level and last 4 hour candlestick. According to risk and reward rules profit target should be double the risk undertaken therefore target $1354 but be wary there could be a bounce at $1360. The FOMC statement followed by press conference begins at 19:00 GMT so reduce exposure before this as gold will be very volatile.