Good morning traders,
Back at the beginning of the month, we were watching price action in gold when it printed a long legged doji at trend line resistance.
Normally, the trading textbook would have you believe that this is bearish price action. But I ended that particular blog post with this:
“It doesn’t have to represent a pending reversal.
With price now continuing to show bullish strength, it could just as easily continue to hug the trend line as price continues moving up, or even reactivate it as support and carry on with the original trend line like nothing had happened and it was never broken in the first place!”
Now take a look at what price has done:
There was a small re-test but with no lower low, price pretty quickly rallied to a new high back above the original trend line and has now continued to hug the level as expected.
When you come across a daily trend line like this, the subjective nature means that a break is never clean. You’ll find that more often than not, what looks to be highly bearish on the surface, actually isn’t. Never get carried away with these sorts of setups.
Do you see opportunity in commodities trading markets? Take a position with Vantage FX and trade gold on MT4 today.
Best of probabilities to you!
Dane Williams – @VantageFX
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Source: Vantage FX Blog