Free Profitable Forex Newsletter
Hey! This is Philip with the Monday trade idea of the Free Profitable Forex Newsletter!
Watching Gold at $1200 support
The Forex market environment remains rather uncertain with the Dollar continuing to strengthen versus most currencies but also being at extended levels due to stretched long positioning and overbought technical levels.
This makes it rather unattractive to go long USD at this point as it's vulnerable to a correction at least and
could reverse sooner rather than later. Of course, some short-term bullish USD trades could definitely work well, but the US Dollar is now more sensitive to negative news surprises than positive ones and hence could suffer badly shall US economic data start to disappoint.
For the above reasons, we are turning to Gold (which also benefits when the US Dollar weakens) and watching for potential bullish opportunities. The yellow metal has reached an important
technical support area close to the $1200 level and bullish signals here should confirm that the support will hold.
However, for the moment, no clear bullish patterns or signals have appeared yet so this remains only a potential trade if the conditions are fulfilled.
Fundamentally, Gold will likely bottom when the US Dollar tops out. This stage appears to be getting nearer, but as stated above, US data will need to turn before this materializes. Complaints from the Trump administration about the Dollar being too strong will also help to weaken the Dollar if they decide to use that option. For now, Trump has been silent on
this matter and we'll see how things develop here.
The reports that are to be released this week (most prominently CPI inflation and retail sales) could be the start of the turn for the worse for US economic data, but that too remains to be seen before making any conclusions.
The $1200 support area will be a good place to look for tactical bullish trades. So, even if it's only a temporary rebound, it's likely to provide a good opportunity to profit on simply because the technical factors have aligned nicely in this area and there is lots of support.
Aside from being a psychologically important level, multiple
Fibonacci retracements and extensions align close to the $1200 level. The rising support trendline of the ascending channel is also in this area. However, not everything is bullish for Gold here. Gold now trades below both the 100-day and 55-day moving averages after being previously rejected at the 100-week moving average at $1235. Hence, the ascending channel could also be broken lower and the downtrend could continue.
The technical situation is shown below:
A lot of what happens this week will probably depend on US CPI inflation that will be released on Wednesday. If it surprises to the upside Gold would quite likely just continue lower, possibly revisiting the $1150 lows.
On the other hand, if CPI is weaker than expected Gold should rebound and give us the bullish
opportunity.
So, for now, we'll be waiting for a rebound here to provide some bullish confirmation before assessing specific entry and exit levels. I'll be sending additional updates to subscribers of the full
newsletter once that occurs.
Keep in mind that Gold is a more volatile asset/instrument than most of the Forex pairs. Therefore, mind the position size when taking trades on Gold, recalculate risk accordingly and reduce the position size if needed.
Trade signals from the past week (FREE + FULL paid newsletter)
- November 07, 2018 - Long EURUSD from 1.1480, closed at 1.1425 = -55 pips (featured in full and free newsletter)
- October 26, 2018 - Long AUDCAD from 0.9250, closed on November 09 at 0.9554, ahead of the 0.9600 target = +304 pips profit (featured in full newsletter)
TOTAL: +249 pips profit in the past week
TOTAL: +747 pips profit since the beginning of October
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