Gold: Breakout Above Bearish Resistance Line Reversed as Pair Dropped to Session Lows Today
The daily candle chart below shows the price history of Gold over the medium term. This Contract for Difference (CFD) aims to track the underlying spot price of the precious metal Gold, and is trading near 1207.80 around time of publication.
Last time Gold was reviewed in Ideas You Can Trade on February 17th, a support line was breached and the price of Gold fell sharply, and subsequently reached 1190.00 last week, before recovering to current levels.
Today there was a breakout of the bearish resistance line (point 1 on chart below in white color) which has been guiding the medium term trend, and after breaking above that line today Gold reversed towards session lows near current prices.
This move appears as a false breakout of the bearish line, after failing to stay above it, however, if another breakout attempt follows then a sustained bullish path could follow - whereas if the bearish line isn't overcome then a likely sharp drop for Gold will continue.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1222.00 with a Limit to take profit @ 1232.00 and a stop-loss @ 1213.00 Risk/Reward Summary: Limit risk = 10.00 Profit / (-9.00) stop-loss risk = Gain to Loss ratio = 1.11
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1205.97 with a Limit to take profit @ 1198.97 and a stop-loss @ 1212.97 Risk/Reward Summary: Limit risk = profit 7.00/ (-7.00) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium Term Daily Candle Chart: