Account Risk: 0.5%
Short:(1x & 2x) @ 1241.5
Stop: @ 1247.1
T1: 1x @ 1230 (2x RR)
T2: 2x @ 1217 (4x RR)
Mindset: 🙂 Doubt it’ll work out, but happy to pay for the opportunity.

I’ve been routinely checking the markets for potential set ups and saw this on the Daily chart which looked like a set up was potentially building to get short on Gold. It looked like price was also running into a cluster of resistance which meant that any trade could well not work out, moving higher and hitting a stop.

Daily Chart

Gold Daily Chart – 06 Feb. Divergence setting up?

Weekly Chart

Gold Weekly Chart – 6 Feb. Resistance levels above.

The Daily set up didn’t materialise – price went higher – but it did develop on the 4H chart.

Four Hour Chart

When I checked this chart (a couple of days later), price had already closed inside the bands and moved higher so I had a nice level to get short with a marginal divergence.

Gold 4H Chart – 9 Feb. A marginal divergence has set up.

I doubt this trade will work out given:

• The four or five resistance levels slightly above price
• Gold is spikey as hell and likes to test levels

For now, the trade is on. Short @ 1241.5. Two positions: one small, one medium. My plan is to run the small position to the trend line (near the 21MA) and the bigger position to the 55MA, which hasn’t been tested for a while. The idea with this is the first target will cover some of my risk if price doesn’t get down to the 55MA before moving higher.

Slight deviation from my normal approach but the trend channel is pretty clear and makes for a good target as it’s slightly further than the 21MA.

Update – T1 Hit – 9 Feb 2017

Price broke down almost straight after I placed the trade. Very lucky with the timing!

My first target got hit pretty quick. Now running the rest to the 55MA. 56 pips banked, albeit at a tiny position.

Update – T2 Hit – 10 Feb 2017

My second target was hit early this morning. BUT, I wasn’t up in time to move my limit order higher (to track the 55MA) so I didn’t get filled! Ops. As the market has already tested the MA I just closed my position when I got to work.

Final Gold 4H Chart – 9 Feb. Not the best execution but an OK trade.

Pretty poor mistake. Gave back 40 odd pips! Sloppy.

The good thing is, I didn’t get stressed and rush about to close my position. I kept it together 🙂 It’s another lesson learnt, set alerts ahead of your targets when you’re not going to be around. I wonder how I would’ve been following a string of losing trades? (Would probably need to upgrade that gif!)

Final RR was 2x and 2.9x (should’ve been 3.5x!!!) It’s good to be closing some 2x+ RR trades though.

What was good about this trade was the better entry allowed me to up the position size without risking more money. So I’m happy enough with the trade.

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.

Buy @ 1218, Stop @ 1198 (200 pips), Target 1247 (300 pips). Two positions @ 2% risk.

Entering back into the markets after my great performance on election night. The entry I’ve taken is on a DST set up. The entry isn’t perfect – I’d like it tighter – but my back testing tells me it’s better to get in to the trade once inside the bands than wait for perfect price.

The set up is on the daily chart at the lows, which have run into prior support at 1205. The Weekly chart also shows support at the 100SMA.

My target is the daily 50SMA, which also coincides with the Monthly 21EMA.

So how do I feel about this trade? Trepidation!

I haven’t had a winner for a while but at the back of my mind are the stats and the probability that it will work out in my favour EVENTUALLY. Hopefully over the next 10 trades my performance will turn-around and I’ll start to see some consistent returns.

Update 23 Nov 2016

Just got stopped out on this trade on a big move down. Not sure why, but that’s fine. Will look for another entry if the divergence sets up again.

Short gold now (@1275) for a small position (due to the uncertainty around the US election). Stop above the prior support, now resistance @1305. Target @1205 (Daily 500MA and prior lows). Risk-Reward: 2

Monthly View

• Price has started to move away from the upper trend line.
• RSI shows divergence at the recent highs
• 50MA (yellow) about to cross the 100MA (pink)

Against that view, price has held the upper trendline for a few months so might indicate more upside. Price also tested but didn’t break the lower band.

Weekly View

• Price has broken through a downward trend channel and is now coming back up to test it.
• That trend line coincides with the 8EMA (red) (which has just crossed the 21EMA – blue)
• The upper band is also near these short term MAs.

A few points against, there’s rising long-term MAs which will offer support 50 (yellow), 100 (pink) and 500MA (purple). The 50MA has just crossed the 500 and 100 as well.

Daily View

• Price has come down to hug the 200MA (purple), so would expect a follow through.
• The next MA is the 500MA (purple) at 1205 (nice target?) Quite far away but does coincide with prior lows.
• There’s a bearish flag pattern so would expect more downside.
• The current daily price range is very tight

Against those points, there’s no real sign of waning of momentum at the moment on the RSI or MACD.

Other thoughts

Look at the multiple moving averages:

• Weekly: Price looks to be working through the long-term moving averages to the downside (was a bounce off the Monthly R3).
• Daily: Price has gone below and is now testing the slower moving averages.

Overall

Weighing up the points I think there’s enough to be short gold for a small position for now. I’m not sure about the affect the US election will have so playing safe. I don’t see why another Brexit style spike couldn’t happen if Trump wins.

Update 4 Nov 2016

Just been checking this trade, since we placed it and price action has moved higher. For now, it seems to have tested the resistance at 1300s and is holding … for now. I actually tweaked my stop slightly! The 1305 level I identified previously was right on a cluster of prior lows and so I moved it a little higher to 1311.

I’ve also added another trendline double the width of my last one. This was a technique I picked up from MoneyWeek about using a prior trend channel to project the next target. You copy the trendline and create an adjacent trend channel. Seems to hold fine.

We’re going into NFP today, and we’re currently sitting @1300 so I can see my stop getting hit if there’s another miss on figures. It’s a small position so I’m happy to sit on this. I’ve invalidated a few of my previous reasons to get short but I can still see downside potential in this.

Hopefully price will move away from stop so I’ve got some more breathing space, if Clinton wins the election, I can see some good downside potential.

Update 11 Nov 2016

So Trump won and gold has fallen quite dramatically – the opposite to what I was expecting. The initial rally in Gold over election night was all bark and no bite.

US Election night stopped me out

Anyway, my short trade was a loser. I was stopped out @1311 on election night with the surprise news that Trump was going to win. I’m fine about this, I knew it was a risk and it turned out to be true. The position size was small and it looks like – for the time being – I was trading in the right direction. So I will look for another reason to get short.

I could’ve not traded, knowing that it was likely to be affected by the election but that was the reason I kept my position size small. It was a small lose just under 1%.

So I’m looking for another short set up, but in the meantime I can see a retest of a prior low which hasn’t been tested for a long time. I’m interested in the retest of this level @1208 level. It’s a first test since June and I’m considering another small position buying at that level for a bounce to the 21EMA using the bands. Will think about it over the weekend.

Long @ 1313.00, SL: 1290.00 (230 pips), TP: 1350 (370 pips), Risk:Reward: 1.6, acc risk: 1.9%

Thought I’d do an update on gold, my last post had some long term technical analysis which seemed bearish to me on the monthly timeframe, but definitely at a decision point, so thought I’d keep tabs.

Monthly Chart

On the monthly chart we are retesting two trendlines, long-term in blue (was support now resistance) and the trend channel down in green. This is a point of decision for the market whether to break-through or fall away. So far the green trend channel has held up ok.

Potentially another leg down to come.

I’m not a confident on elliot waves but I think I can count a fairly realistic 4 of 5 waves down. Based on this I’ve marked a potential target area at 980 for the final wave 5. There is also prior resistance from 2008/2009 but might also nicely coincide with the rising 200MA coming into view. I can see price getting to my target zone by mid to late 2017 into early 2018.

Weekly Chart

This move down might be in the early stages now. I can also see an ok A-B-C retracement to the upper trendline on the weekly chart. However there’s a couple of points of caution that point to more up-side:

1. Crossed above the weekly 200MA
2. MAs are pointing up
3. Hand-railing of the upper trendline

Daily Chart

So this is probably questionable trading but I actually saw a long trade that I’ve taken into resistance @ 1350.

The test of the lower line of this wedge came with rising RSI which indicated to me it wants to go higher. This entry lined up nicely with the lower band being tested and the 100MA. So I took the trade long @1313 with a stop @1290 just below prior resistance.

It’s worth noting, this trade was the day before FOMC (which is the most recent up bar for today) which may have been a stupid trade. However, I felt with pretty mediocre data lately it wasn’t too stupid. Not sure if this is classed as gambling? It’s hard to know what is sensible when swing trading – there always seems to be a news event that could scupper you. For now it is in my favour but sure it’ll take a few days to work up to 1350 if it does get there.

Update 27 September 2016

Price seems to have faltered to me so I closed my trade on the retest of the recent highs at 1340. What got me nervous was the series of daily spinning top candles into the bands hugging the 50 MA.

I often wonder whether I should always let stops take me out rather than arbitrary decisions? Probably yes, you never really know which way the market will go.

On the 4H chart, which I didn’t check at the time (why? I don’t know), the price action is showing divergence so maybe that wasn’t such a bad call.

Some profit banked which is good.

In summary, this is how I feel about the trade:

Good

• Entry on a trendline support coinciding with the bands
• Rising momentum on the trendline support

Not so great

• Long term analysis pointed to the downside
• Overhead resistance at the 50MA