Forex Marketz Daily Forex News – Fully Markets Update
XAU/USD (1071.24)
Points to consider in the Gold market:
- Gold is now down 10 percent since topping last October 10-15. The yellow metal is crashing through support levels.
- This selling is concerning and scary absent attractive risk management levels.
- Long trades are tricky as any break higher has been weak to date.
Gold is in the middle of a profound, and scary downturn. The precious yellow metal has lost 10 percent in a month. Twenty one of 24 trading days have seen gold close lower. After hitting a high at $1,190 per ounce on October 15, the commodity universe has been very unkind to gold traders. This is a very bearish trend that has driven gold to a fresh five year low that was set this morning after breaking through the July low at $1,071.28 per ounce.
Traders Have Three Options
Traders of the yellow metal have three options now. These options are not complicated and do not offer some grand solution.
- Chase this incredible down move. How? This is not easy given the absence of any nearby resistance levels. There is also no nearby support levels. Remember we have not been in this area in five years. You could use support by projecting the trend-line, but other than that it is a guessing game when to enter short.
- Hope to play a reversal in gold prices. This is one big move lower. This prospect is daunting to predict and not for the faint of heart. Only attempt if you have a lot of experience chasing trend reversals. You need to be good at using tight stops and very strong profit management. You need a strong stomach for this.
- Be patient. Wait this storm out. This is an option often overlooked by option traders. Remember that cash is also a nice position to have in one’s portfolio. Wait for this market to bottom out or wait for a break higher to take advantage of a short gold sale. Let this down trend become more substantial or wait for prices to congest before jumping in. Wait to sell at former support now resistance level for a short trade.
