Technical Analysis XAUUSD : 2014-09-19


Good day, dear traders. Let’s consider a XAU/USD (Gold) in the H4 chart. A price moves within a H4 downward trend channel since 28 of August (21 days). A direction is fundamentally justified by the Eastern Ukraine stabilization and a fast recovery of American economy. Investors sell reserve assets and put available capital in growing American indexes. Yesterday an American jobless claims indicator has been released. Its value turned out to be lower then expected level and lower then the previous weekly value as well (-11%). This macroeconomic event characterizes a recovery of consumer’s demand sector and business activity in US.

A direction of price movement is verified by Donchian channel and a Parabolic trend indicator. The only alarm is connected with the RSI-Bars oscillator: a growing tendency is fixed, which signifies a bullish divergence. In order to open a short position with confidence we should wait for the breakdown of oscillator’s support 25.17%. According to our opinion this will happen simultaneously with an intersection of a significant fractal support 1215.34. It is verified by “double bottom” model and a lower boundary of Donchian channel. In this case all risks should be limited by a 1248.18 level, which lies above the last fractal resistance. This mark is verified by both trend indicators.

After opening the position we move the stop to the zone of next fractal maximum, following the parabolic indicator. It is sufficient to do daily refresh after the formation of 5 new 4-hour candles, which are necessary for the formation of Bill Williams’ fractal. Thus we change the possible profit/loss ratio in the direction of “no loss” state.
PositionSell
Sell stopbelow 1215.34
Stop lossabove 1248.18
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