A Gold Update: Shorting Scenarios

August 5, 2015

The following is a bit of a follow up to a previous Gold technical analysispost in the Vantage FX News Centre in which we spoke about getting in early for a break of major support.

Gold Weekly:
gold2
Click on chart to see a larger view.

As you can see on the weekly chart, Gold broke the gold 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 Federal Reserve rate hikes, 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:
gold1
Click on chart to see a larger view.

Watching for momentum in a breakout is hard to do and it’s very easy to get caught up in a false break or fakeout. 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 break out.

2. Re-testing the broken weekly support level now as possible resistance.

Gold 4 Hourly 2:
gold3
Click on chart to see a larger view.

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.

On social media we’ll first be watching for any short term weakness on a re-test of the 4 hourly triangle pattern to look to sell into. Follow and Like the Vantage FX Twitter and Facebook Page to get involved in the discussion.

Also don’t forget to take a look at the brand new Vantage FX Commodities Trading page!

Dane Williams – @VantageFX

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