In-Depth Review of Gold - Why Should You Enter a LONG Trade Now?

Hi everyone, in this technical analysis I will share how you can use price action to explain the recent price moves, along with my outlook on the future price movement for the next week.

After seeing the result of the vaccine announcements on the price, I expected that gold was at a temporary low. Honestly, it was scary to see how the price just went through the support like a knife through butter.

The question arises, how do we trade this? I say based on risk-reward principles you should enter this with a long position. The reason being that we know the price has dropped so much it is relatively 'low' right now.

In the end trading works because of two main concepts. We have risk-reward and buying low + selling high. The risk-reward is defined in this case by making sure you put a stop loss below the bottom support zone, maximizing your risk on ~2%, while your take profit should be near the resistance level II or III, putting your potential gain on 5-10%. Even if you are wrong 3 out of 4 times you'd still be able to make a profit with such a set-up.

The next part is about buying low and selling high. Buying into a long position for an asset that has dropped so much over the recent months is the clear text-book definition of buying low. Of course we can only tell in retrospect if it was low enough, but this is the moment to enter a long position.

I tried to make the chart as self-explanatory as possible. I hope the statements above can be seen directly on the chart. In case you have any questions or comments, feel free to leave a message below.

-Trading-guru