FxWirePro: Gold bulls test supports at double top neckline, bears active on failure swings at rising wedge resistance – trade boundary binaries
Source: FxWire Pro - Technicals / 21 Mar 2018 07:21:44 Eastern Standard Time
The gold (XAUUSD) on daily terms: the double top formation is spotted out with top 1 at 1365.95 and top 2 at 1344.62 and neckline at 1306.40 levels. This bearish pattern is coupled with shooting star that has occurred at 1347.60, bearish RSI and stochastic curves convergence and bearish DMA & MACD crossovers.
As a result, this bearish setup has caused the price to slide below DMAs.
Please be noted that the weakness in this commodity price, ever since the failure swings at stiff resistance at $1350-$1360 areas and the occurrence of the flurry these bearish patterns.
Even on intermediate terms, the bears resume exactly at rising wedge resistance. The intermediate trend extends rising wedge (refer weekly plotting). The current price slid even below 7EMA and likely to drag further dips on the failure swings at wedge resistance & mounting selling momentum signaled by the leading indicators on this timeframe. But see intensified selling interest only on the breach below 21EMA.
Stochastic curves pop up with the %D crossover to signal selling momentum. While RSI has also been showing downward convergence to the prevailing price slumps. These indications have been extremely weaker in the minor trend.
To substantiate this bearish stance, MACD and DMAs also show bearish crossovers that signal price dips to extend further in the days to come.
However, bulls are testing strong support at the neckline of double top despite the lingering bearish sentiments in the minor trend.
Hence, wait and watch out closely for decisive breach below 1306 levels.
Well, while waiting as with bullish swing trades, if the reward-to-risk ratio is acceptable, you could enter your trade using a boundary binary options.
This would result in allowing you to participate in ongoing rallies but trading between restrained areas. Use upper strikes at 1320 and 1309 levels. The yields are certain as long as underlying spot gold prices remain between these two strikes.
While for an aggressive bear, an alternative to short selling would be to buy an in-the-money put option. If you choose to use options, you would use a contingent order to buy the put after the gold price hit the entry price.
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