Hi Traders! Here is the update and follow up of the Gold technical analysis post. On February 11th 2020 I shared with you this “Gold Forecast Update And Follow Up” post. The platform in which we performed this multi-timeframe analysis is on the MetaTrader4(MT4). You can find some useful tips and hacks about the MT4 platform here. First lets do a recap of this technical analysis and then we will see how this setup has developed now.
Gold H1 (1 Hour) Chart Analysis
On the H1 chart based on the current scenario my view still remains bearish in the short term and we may expect further continuation lower. But pay attention to the downtrend line shown in the screenshot below, because we had a triple wave to the upside followed by two waves to the downside so currently if the price moved higher, breaks and holds above this dynamic resistance then this bearish view will be invalidated (false breaks can be neglected).
Gold H1 (1 Hour) Chart Current Scenario
On the H1 chart based on the above mentioned analysis my view was bearish in the short term but I also mentioned to pay attention to the downtrend line because we had a triple wave to the upside followed by a double wave to the downside so if the price moves higher and breaks above the most recent downtrend line then it would invalidate the bearish view. This is what exactly happened here, the price created a bullish divergence and then it moved higher and broke above the most recent downtrend line thus invalidating our bearish view.
When it comes to trading, similar to that of the entry and exit plan, the invalidation level also plays a key role. You need to have a perfect plan of when to enter a trade, when to get out of it and most importantly when not to enter a trade. When things don’t go our way as we planned then its better to skip that particular trade setup so that we can avoid losses and look for the next best opportunity. This trade setup is a good example for that.
Not sure how to enter a trade? Not sure how to decide invalidation levels? Spot reversals (bounces)? Not sure how to spot breakouts?
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Yours to success,