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Gold Trading | Look for Pullbacks and Weak rallies to Capitalize

Market sentiment is Bearish

Volatile moves in Gold are creating a sense of uncertainty among Market Participants. Since most traders expected gold to rise after Donald Trump’s victory, instead the opposite is happening now, they got trapped in the markets and their rush to liquidate their existing positions is what driving the prices lower. Market Psychology of Gold itself is an interesting factor to study nonetheless. My Price action trading analysis on Daily chart of Gold offers a clear view on the Market structure

There are only two upcoming macro factors that are going to influence the price action of precious metal.
1. Political Actions of Donald Trump and Policy moves of his Presidency
2. Federal Reserve and its Monetary policy

Stay closely connected with these two macro factors which can have a potential impact on asset prices and ignore everything else (Expect any specific event spooks the market)

From the perspective of Price action, we see that bears are controlling the sentiment. Take a look at the price action before and after the Election results – Market formed a large pin bar at 1300.00, the huge shadow of candlestick (wick) shows the strength of price rejection. In a classical Wyckoffian term, it’s known as absorption, when supply consumes the existing demand or when demand overcomes the existing supply in the market place. Prices retested the key level twice and bears were able to absorb those bids, confirming the strength of sellers.

Traders can look for bearish pullbacks, or any weak rallies to initiate trades. In case if we see any counter momentum such as strong impulsive bullish moves or bullish climax moves then we need to reconsider our trading strategy.

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