Hi Traders! Gold short term forecast follow up and update is here. On February 15th I shared this “Gold Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, we have a bearish divergence that has formed between the first high that has formed at 1865.39 and the second high that has formed at 1879.44 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as another evidence of bearish pressure. So the bottom line here is that the H1 chart has evidences supporting this short term bearish view. Until the invalidation level shown in the image below holds my short term view remains bearish here. If we get a valid breakout below 1850 level we may then consider it as a validation for this short term bearish view and may expect the price to move lower further.
Gold H1(1 Hour) Chart Current Scenario
In Gold based on the above-mentioned analysis, my short term view was bearish until the invalidation level holds. Also, I mentioned that “If we get a valid breakout below 1850 level we may then consider it as a validation for this short term bearish view and may expect the price to move lower further”. The price action didn’t follow my analysis here, the validation for the bearish view which is a valid breakout below the 1850 level happened with the price creating a bearish convergence based on the MACD indicator. Generally, after a bearish convergence, we may look for pullbacks and then further continuation but here the price which was moving higher broke above the invalidation level and is holding above it. This is a contradictory sign opposing the bearish view. My current view on Gold is neutral.
So traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had facts supporting the bearish view here, the price moved higher, broke above the invalidation level and is holding above it which we may consider as a fact provided by the market opposing this bearish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
