Gold Heading South Again?

Hello all, I decided to enter a short order on Gold today at 1459. Here is my analysis and thoughts with reference to the daily chart below.

In my opinion there is a resistance zone at the 1478 region. This level acted as support back in July, 2011. Price is currently in a downtrend but has retraced to this resistance level, and has also retraced to the 20 EMA providing confluence.

We had an indecision bar at this resistance level on April 26th, followed by two inside day candles, one of which was a doji (or almost a doji depending on how picky you are). Today price broke below the low of the first inside day bar and that is what I used as my trigger to go short.

I have set my stop loss above the high of the indecision bar at 1487 and a take profit at 1406. I selected 1406 as my TP because this level appeared to act as brief resistance and brief support on prices way up to 1487 so I suspect price may stall here again. This TP level almost provides a 2:1 risk vs. reward.

Once again this post is meant for educational purposes only and is not to be taken as trading advice.

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Cheers 🙂

20130501_Gold

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