Gold Trading Strategy: The Asian Effect

Back to Gold

Gold has been held to a tight range over the past several months but with a distinct downtrend as evident from the monthly chart. What has caught our attention is the potential H&S pattern on the daily chart.  Gold has benefited from minimal safe-haven flows as the Yemen crisis deepens but most importantly it just show us the yellow metal has retained its safe-haven quality that some suggested has diminished.

Due to the volatile nature of the commodity, we believe what may enhance our projection for the yellow metal is China latest reforms on gold imports. Until now only 15 banks were allowed to import gold in China. As of 1 April 2015, the People’s Bank of China (PBOC) will allow more companies to import gold, which should reduce the premiums for importing gold. There is no guarantee the PBOC actions will in fact spark demand for gold, however, we believe the renewed safe-haven flows should sustain further gains in the previous metal.

Gold Technical Analysis

We are using the daily chart for our trading strategy in XAU/USD.

Gold Daily Chart

Please click on the chart to enlarge:

Gold Daily Chart, 27/03/15

Gold Daily Chart, 27/03/15

The key support appears to be at $1,197 on the daily chart. Recent weakness may paint the right-hand shoulder of the reversal pattern at the daily close. The risk of executing the long trade at market price is to witness a deeper retracement that will drive the price below $1,187 where we believe many orders are located.

Gold Trading Strategy: The Asian Effect
Gold Trading Strategy: The Asian Effect

We must therefore place the protective stop beneath those orders in case of ‘unusual’ trading activity in gold. Yellen speech in San Francisco in today’s session may trigger a temporary USD selling as the Fed wishes maintain a weak US Dollar, which may support further gains in the previous metal. We highlight this is not a tight stop so do bear it in mind in the trade size.

Gold Trade Details

Gold long @ market price
Take profit: $1,272.00
Protective stop: $1,172
Risk-Ratio (RR): 1 : 2.7 (approx.)
Estimated duration: 14 days

01/04/15: After a long wait, gold has triggered those orders we suspected to be located below $1,187 and moderate gains were noted in today’s session.

Gold Daily Chart 01/04/15

Please click on the chart to enlarge:

Gold Daily Chart, 1 April 2015

Gold Daily Chart, 1 April 2015

We are closing 15% of the long trade at market price.

06/04/15 UPDATE: Gold extended its gains following the hefty buying that took place on Friday, inline with our bullish outlook for the commodity.

Gold Hourly Chart
Gold 60 Minutes Chart, 06/04/15

Gold 60 Minutes Chart, 06/04/15

We are closing 35% of the long trade at market price and shift the protective stop to the entry. This trade is now made available also for traders that are not subscribed to the global trade alerts packages in light od recent profit.

06/04/15 UPDATE II: We have decided to close our long trade in gold at market price ($1,219.71). We have ended the trade with a decent profit.

As XAU/USD (Gold) trade is closed it can  now be accessed by all traders. Open trades are restricted to members only. We have been proving trade alerts in the spot Forex market since May 2014. Sign up for one of our plans and review our documented trades performance.
Gold Trading Strategy: The Asian Effect

Gold Trading Strategy: The Asian Effect
                                             Gold Trading Strategy: The Asian Effect
Gold Trading Strategy: The Asian Effect
                                         Gold Trading Strategy: The Asian Effect
Gold Trading Strategy: The Asian Effect


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