This article is Part 2 of a series.
Gold (XAU/USD) closed at a seven-year high today! 🎉
Like I mentioned in my original trade idea, I was looking for gold to weaken towards its 50 SMA, and then resume its uptrend from there (which it did).
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Let’s take a deeper look at the yellow metal.
According to MarketMilk™, XAU/USD’s performance is looking…golden!
Gold is green across the board!
And right now, it’s looking mighty bullish.
Silver (XAG/USD) is in a bullish short-term trend as well.
Let’s take a look at gold volatility.
Since folks tend to rush into gold during times of fear, its volatility behaves differently from “normal” volatility.
But in gold’s case, high volatility usually means gold rises.
Gold and gold volatility (GVZ) have been moving in tandem….until now.
Gold reached new highs but gold volatility did not.
Will GVZ turn up? 🤔
Let’s look at gold’s daily (1D) chart…
Today, price not only closed above $1700, a psychological resistance level but also above its former high of $1703 on March 9.
Will we see a continuation from this breakout?
The fundamental narrative support further upside.
Not only does uncertainty remain in the markets due to the coronavirus pandemic, which favors safe-haven assets (like gold), but with lots of central banks announcing record amounts of stimulus (money printing), there’s now growing demand for gold as a hedge against future inflation.
I still see a move towards gold’s all-time high (ATH) of $1921.
While I remain long XAU/USD, I will move my initial stop loss higher and lock in some profit.
My old stop loss (SL) was 1540 (light purple dashed line).
My new stop loss (SL) is now 1609.
My entry was 1600 so this locks in $9 or 900 pips, a 0.56% gain.
As a reminder to folks who are new, when trading gold (XAU/USD), a pip is $0.01, or one cent.
One standard lot of gold equals 100 ounces.
So if gold goes up 100 pips, this means the price went up $1.00.
And since you’re trading 1 lot, which is 100 ounces, it means your P/L is up $100 ($1 x 100oz).
In other words, if you’re long 1 lot of gold, for every $1.00 move, which is 100 pips, your P/L moves by $100.
Big moves in gold can quickly blow your account if you’re not using proper risk management.
So be careful and make sure you understand how trading with margin works.
Otherwise, you’ll end up with fool’s gold. 😂
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
Read more about this trade idea's development over time.
Pippo thinks gold will continue to rise due to growing demand by investors looking to protect themselves from inflation risk as central banks around the world start “printing” money.
Pippo went long gold (XAU/USD) and has locked in a profit of 900 pips so far. See what he plans to do next.
Pippo went long gold (XAU/USD) and decided to tighten his stop loss, locking in a profit of 7,400 pips. See why.
Pippo went long gold (XAU/USD) and decided to manually close his trade early with a profit of 8,350 pips.
Saturday, December 5, 2020