The following is a bit of a follow up to a previous Gold post in which we spoke about getting in early for a break of Gold's major support.
Gold Weekly:
As you can see on the weekly chart, Gold broke the level we were previously watching and has now well and truly dropped down through major support in a sustained breakout.
Maintaining a bearish bias on Gold due to the imminent rate hikes from the Federal Reserve, I see two main scenarios for managing risk from the short side here.
1. Shorting a breakout through this 4 hour triangle with stops on the opposite side.
Gold 4 Hourly:
Watching for momentum in a breakout is hard to do and it’s very easy to get caught up in a false break or fake-out. Instead, look for any sort of weakness or long wicks as price re-tests previously broken support now possibly as resistance.
I find this sort of weakness much easier to determine as you have more time to watch the price action as the candles unfold. An exact entry level at the top is then not as important because if you are correct, then you are on board at a better price than if you immediately sold the breakout.
2. Re-testing the broken weekly support level now as possible resistance.
Gold 4 Hourly 2:
The second 4 hourly chart has some zones marked where price previously reacted inside the weekly support/resistance zone that we could use to manage our risk around. This option may never play out as we are now so far away after price broke the level with such momentum.
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