After featuring XAU/AUD (the ugly cousin?), over the last couple of weeks, a double top in XAU/USD has eventually brought us back home!
First up we focus on the gold daily chart, featuring a nice double top at previous support turned possible resistance:
A double top that just happens to coincide with that previous swing low you can see on your MT4 charts from back in September 2016.
I guess you could call that a confluence of resistance now that we have the second touch of a potential double top? Well, whichever way you want to look at it, you have price that has retested previous support as resistance on the daily and when you zoom in that little further you can see potential for a clear double top.
So now that price is being capped by resistance, we zoom into an intraday chart to look for possible short term pullbacks to short into:
Price hasn’t cleanly rejected off the daily level like we’d ideally like, but if you’re after textbook idealism then live forex trading probably isn’t for you.
In saying that, price is forming lower highs and lower lows and this level is a short term retest that we can use to enter off and manage risk around if you’re aggressive, while still being close to enough to the double top if you’re more conservative.
Before I wrap up this morning’s post, I want to embed a Tweet I shared yesterday:
You know what it means when that headline pops up on CNBC!
— Dane Williams (@danewilliamsau) March 29, 2017
It was a tongue in cheek comment about how being a contrarian to trading calls made in the mainstream media is never a bad strategy.
My chart is obviously a little different to the Gold chart in that CNBC article, but the possible herd mentality of this trade is definitely something to be aware of.
Dane Williams – @VantageFX
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Source: Vantage FX Blog