The idea
Gold has been having a corrective movement lately. The price has created a slightly descending channel. If we draw a linear regression channel we can easily see the consensus of price, represented by the mean line, which is the average line of the price set for the range, and the edges of the channels are set at ±2 Sigmas (standard deviation) of the centerline.
On the 2H chart we see that, after the price did a higher low below the centerline, it went up, and consolidated for a while above that line. Today it made an engulfing figure that broke through the recent range and is heading up.
A long position was entered at 1,711.12 with a stop-loss at $1,699.12 and a take profit of 1,725.12, which gives a reward to risk ratio of 1.17, which is less than the usual, but also the target can be reached easier, as it is not set at the top of the channel but at the recent high of the price, made on May 08.
Main levels:
- Long entry: 1,711.12
- Stop-Loss: 1,699.12
- Take-profit: 1,725.12
Reward/Risk Ratio: 1.17
Dollar Reward and Risk
- Risk:$1200 per lot, $120 per mini lot, 12 per micro lot
- Reward: 1400 per lot, $140 per mini lot, $12 per micro lot.
