Technical Analysis XAUUSD 2014-09-22

Good afternoon, dear traders. Today at 15:00 (CET) Mario Draghi will be giving a speech on economic affairs and monetary policy at a parliamentary committee in Brussels. The ECB head is expected to express the EU economic development outlook, as well as to provide a more detailed plan of the QE3 policy, which was announced at the last ECB hearing. If an economic outlook of Draghi has a positive decline then investors will sell reserve assets like Gold. Today we expect a new volatility momentum of the XAU/USD instrument.

Here we consider the H4 price chart. We observe a movement within the bearish trend channel. The direction is confirmed by Parabolic indicator and Donchian channel. The RSI-Bars divergence completion can be considered as a strong bearish signal. The last bar of the oscillator broke the uptrend line. Pending sell order can be opened below the last fractal support at 1207.79. It was confirmed by the lower boundary of the Donchian channel. Risk limitation is to be placed above 1228.75, which corresponds to the double top level and Bill Williams fractal. This level is also confirmed by Parabolic historical values, which give an additional confidence in a conservative strategy.

After position opening, Trailing Stop is to be moved after the ParabolicSAR values, near the next fractal peak. Updating is enough to be done every day after the formation of 5 new H4 candlesticks, needed for the Bill Williams fractal formation. Thus, we are changing the probable profit/loss ratio to the breakeven point.