Gold Price Analysis: Bears back in the drivers seat, 1:3 R/R setup in place

  • The price of gold has moved into bearish territory offering a trade setup scenario.
  • A 1:3 R/R 4-hour swing trade is on the cards, but the price first needs to correct. 

Gold prices are weaker as the week goes by and have fallen into the bear's liar. 

For fundamentals, see here.

Gold and DXY technical analysis

In the above analysis, there was a bullish case in the making considering a number of intermarket implications and price analysis for which is starting to come to fruition.

As for gold, in a previous analysis, it was stressed the dollar was in the driver's seat and to monitor for a 5th wave to the upside:

The above is a prior DXY analysis which has started to now play out, as illustrated in the live chart showing the current price below:

So, now with the dollar moving in the right direction, we can focus back on gold prices.

Gold was testing higher prior to the drop, a price action that was expected as illustrated below:

The daily chart above was showing clear resistance.

The price was trapped between there and support and it was explained that a break of either will be significant.

The best place to monitor for a breakout is down on the lower time frame charts and there was this analysis prior to the recent drop:

It was explained that a break below the 4-hour support will open the potential for a short.

Following the events of the US session, the price is now, as expected, in a position where a sell limit can be placed to take advantage of a discount as follows:

As shown in the above 4-hour chart, the price has followed the above analysis to a T.

The sell limit can be strategically placed at the structure for a discount with a stop loss protecting the position, if the sell limit is triggered, above the highs. 

The target is established just ahead of lower structure for a 1:3 risk to reward.

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