Gold – The Tug-of-War Continues

25 Jun - Gold Daily Forex Chart

(Click on image for larger view)

Hi All,

Just a quick update on my favourite metal.

On the 29th May (see article), Gold broke out of a fairly significant consolidation triangle. If you have been following my posts, you would also know that I’m a big advocate that break outs gives us a higher probability trade.

Tug-of-War

Since then I have been looking for a short continuation set up. Having said that, I cannot ignore the fact that we are in a clear range market and no one knows how long a Tug-of-War between the buyers and sellers can last. This Tug-of-War was mentioned on 20th Mar (see article). Moving forward, in my commentary last Monday (see article), I thought price was ready to move lower – but the market did not agree with me. Instead it decided to move higher.

You can see why I call this a Tug-of-War, can’t you? The market becomes even more difficult to measure than usual and clear directions are hard to pick due to the choppiness.

Another Test

25 Jun - Gold 4HR Forex Chart

(Click on image for larger view)

Yesterday was another test of price action when I found that price was testing a soft (resistance) level again ~1325 (see chart at top of page). In fact, looking at the 4 hour chart (above), price gave me a smaller triangle at that level. As price moved higher, I took a long breakout trade but moving my stop to break even where I see fit. When I woke up this morning, I found a closed position as price failed to move with conviction.

While this was not a winner, breaking even was indeed a good trade.

25 Jun - Gold Daily Forex Chart 2

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Looking at price action now, price has given me a nice Inside Bar False Break set up. This is another of my favourites and I will happily wait for the set up to materialise. If it does happen, my near term target will be the previous resistance (now support) around ~1280. But if price moves higher, then I shall sit aside and wait for more price action before I make a decision.

If you have any questions or comments, make sure to post them in the box below. Thank you and have trading.

Note:

If you are interested to understand more of my view on Market Psychology (see explanation), including the idea of Tug-of-War and Inside Bar False Break, make sure to get your copy of “How to Read Price Action?” (click here) today. 

 

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