Gold prices have fallen from the key highs of $1955.00 after the recent NFP numbers. In this video we show you how to trade Gold and what to look for next.
Watch the video to learn more…
How To Trade Gold?
The price of Gold has recently broken through multiple key levels of support. This has been down to the strength of the USD returning to the market. Non-Farm Payrolls data really shocked the market on Friday coming out at a sizable 517k, compared to the expected 193k. Unemployment rate also fell, coming down from 3.5% to 3.4%. This data is the opposite of what the Federal Reserve wants to see going forward, as it could create higher inflation.
When looking at trading Gold and other forex pairs one key pattern has stood the test of time. That is the double top or double bottom pattern. This pattern is one of my favourites as it allows you to think about what is happening at a key level. For instance, if the price trades to the level of resistance, instead of guessing that price will stop and turn there, we can wait for a sell off. All we have to do then is look for the market to retest the highs and reject again. Same for a double bottom pattern but with the lows.
At the moment the price of Gold is trading within a consolidation pattern. We cannot implement the double top or double bottom in these conditions. Instead we need to wait for the price to trade out of the zone, retest support or resistance, then look for the pattern on a lower time frame.
The price on the chart has traded through multiple technical levels and some observations included:
- Price is trading within a range on the H4 chart.
- A break higher would lead to a move towards $1910.00.
- A break lower would lead to a move towards $1840.00.
- Look for the price to form 2 consecutive close outside of the support or resistance to confirm a breakout.
- Once the break is confirmed, look for the price to retest as support or resistance.
- Look for the double top and double bottom pattern for confirmation.
Have you watched our USDJPY analysis? You can see it here.
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