Gold – LONG – 22nd May 2018
The daily chart gives us our bias for the following trading day and we can clearly see the bullish rejection candle marked with the yellow arrow. Prior to this we can see multiple ‘indecision’ candles or ‘doji’ candles. This was a clear sign that momentum to the downside was potentially fading. We also had an inside bar failure with traders being trapped to the short side. These confluence factors were enough for us to consider opportunities to the long side.
The hourly chart shows MACD divergence and a break of the 50EMA. Whilst this is not a text book set up on the H1 the bias on the D1 was clear enough for us to take this trade. As usual we waited for a retrace back to the daily pivot which also coincided with a retest of the 50EMA. Our trade was entered early on in the London session.
After being entered into the trade price quickly moved up to the R1 level where we took profit. This also coincided with prior H1 highs. The result was a 1.61R gain. Our post trade analysis showed that if we had stayed in this trade we would have gained approximately 3R. Given the D1 so was strong we should have taken the trade to the next D1 level. This is a learning point for us and something to consider when we carry out a full journal review.