This is my 4th short on Gold (XAU/USD) since November 2012.
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| XAU/USD 1 day chart |
I noticed the convergence of the short term diagonal support meeting the longer term diagonal resistance. That is all the 'picture' I need to decide that shorting it might be a good idea. Okay, let's make that 2 pictures, because I always like to zoom out for the bigger picture. Let me examine my thoughts one at a time.
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| XAU/USD Zoomed Out |
The support as represented by the diagonal joining the lows is broken. That longer term downward diagonal was drawn from the bar of May 3rd and that is resistance. Looks like a case of the bigger wave overriding the smaller one. 3 bounces each off both diagonals. Okay the resistance was broken too. And that seems like a
bull trap. I like how it looks. The Reward vs Risk looks good. Let's go.
So those were my thoughts. Next I plotted the stop loss just above the recent range. Then I calculated my R to be 48 units. Hmm, a bit too much risk for my 1% to stomach. However, I still feel I wanted to be in the trade. So I took the high of the bar as my stop loss instead. R is 20 units. Nice. So I set my stop at 1321. Calculated my position size, and entered a market order for a short.
That was 2 days ago. Now it is showing a profit. Nice.
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