Acc Risk: 0.5%
Sell: 2x @ 1212.6
Stop: 2x @ 1221.6 (90 pips)
T1: 1x @ 1206.3 (96 pips, 1x R:R)
T2: 1x @ 1187 (256 pips, 2.6x R:R)

Update – T1 hit – 25 Jan
Update – T2 hit – 25 Jan

Saw this set up on Gold doing some back-testing. I doubt it will work out given the MACD divergence is a step down and the Daily and Weekly charts both have moving average targets nearby @ 1230. However, I’m trading the set ups I see, trusting in the probabilities from back-testing. Will post an update once I see what’s happened.

4H Chart – The Set up

Daily Chart

Weekly Chart

Update #1 – 25 Jan

First target has been hit, second target still a way away but rising which is skewing the RR. The T1 ended up being a sub 1x RR. Something to test in future is whether it would be better to go for a static target such as the prior high/low?

One thing I have noticed is how the divergence is now setting up to go long. It’s a different kind of divergence to the pure DST divergences I’ve back-tested so I won’t trade it. But I suspect if we get a close back inside the bands there’s a reasonable chance the T2 won’t get hit.

DST Update – XAUUSD 4H Short – 25 Jan

Update #2 – 25 Jan

The candlestick didn’t close inside the bands and the second target got hit shortly after T1 was hit, with a nice move down. Ended up being a 196 pip move (2.1x RR trade). Not bad, I’m quite lucky really that price did move down to my target relatively quickly, given the MA was creeping up.

Gold DST Trade 25 Jan 2017. T2 hit nicely, order was just ahead of the 100 MA.

Trade Review

I spent most of the time thinking this wouldn’t really work out, so I’m glad I ignored my inner doubt 🙂 The trade was actually a pretty clean trade in the end. I think if the higher timeframes had been aligned I would’ve been happier to take the trade.

My position size was really small and I’m frustrated that it didn’t really win me much considering it was a few hundred pips. Next time I think I’ll up it to 1%.

Looking at the chart now, Gold found support at 1180 and it looks to me like it could set up for a retest with divergence to go long at 1170-1180, we’ll see. (That would coincide with the lower band on the weekly chart.)

Gold 4H Chart – 30 Jan. Looking for the next set up.