As expected, Gold failed at the price of 1385, and has been attempting to find a mid-term direction since then. The commercials are continuing to provide us with a very clear short setup with a commercial index value of 8.7 in the three-yearly comparison.
As early as the end of July, I drew attention to a decisive level in Gold at this point. We have now arrived at this level once more. After the first attack of this level at 1320 dollars stuck, the bulls lost their momentum even before reaching the 1380 dollars. Now we are once again seeing a very weak weekly candle in Gold.
The next support is located in the area of the two weekly highs around 1300 dollars. If this level does not stick, a plunge down into the lower 1200 region is probable. I have marked the big support level on the weekly chart.
On the daily chart it is easily visible that by now, Gold has clearly broken out of the triangle and has set off with great momentum in the direction of 1320 dollars. A projection of the height of the triangle also brings us to a price target of 1230 dollars starting from the breakout.
The 4-hour chart makes the picture even clearer, and rounds this analysis off nicely with several clean setups. If the 1320 sticks again, we can expect a setback in the area of 1335, before Gold can then set off for new lows. Here, a short entry with a stop at 1365 and a target at 1275 would be conceivable. This gives us a nice chance-risk ratio of 2:1. The 30-dollar risk is counteracted by a potential profit of 60 dollars.
A further possibility would be to directly trade the breakout under the 1320, with a stop in the area of 1331 and for about 20 dollars’ profit until the 1300.
So here we have two trading opportunities in Gold with good chance-risk ratios going in the same direction as the current advantage. This is exactly what we are looking for as traders…
For presentation purposes the trading software “AgenaTrader” has been used.
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