High Probability Setup to short XAUUSD
*****Week 27, Wednesday, 29 June 2022*****
In this analysis, ATR(14-period) and the size of the body candle are used to determine the momentum of the candlestick. When the value of candle size is bigger than the ATR value, the analysis concluded that the momentum is higher than the average range. Thus, we can conclude that a continuation of the market structure is highly likely to follow through.
XAUUSD
Based on the daily chart:
1. From 15 March to 22 April 2022, the price has failed to close below 1917. That area has been held as support for more than 1 month or 27 trading days.
Finally, on 25 April 2022, the bearish daily candle closed below support 1917 with momentum indicating the first signal of a downtrend market. Where the value of bearish candle size is higher than the ATR value (34.3 > 28.5).
2. When the market is forming Lower High and Lower Low, a descending trendline is formed to observe how the price would react to the trendline. It is either the price would respect or break the trendline. It is the opportunity to enter a short position. As professional traders, we have to patiently wait for the confirmation and confluences.
2. On 16 May, the price rebounded from 1790 to 1870. 1870 is the 38.2% Fibonacci retracement level. When the price failed to break and close above the 38.2 Fib level, the market was ranging between 1830 to 1870 for 3 weeks or 16 trading days.
Finally, on 13 Jun 2022, there is a bearish engulfing candle closed below the 1830 support area with momentum above average. This is the confirmation to enter short positions because the bearish engulfing candle:
- respected the descending trendline.
- rejected at fib level.
- closed below 1830 support
- closed below 200 daily EMA
- momentum above average (52 > 27.3)
This setup has 1:2 RR. But, if you can get a second entry at 1849, your RR could improve to 1:3.5
Personally, I'm taking a 1% risk at 1820 and another 1% risk at 1850 with both Stoploss at 1880 and Target Profit at 1700. So, I'm risking 2% to make 7%.
In this analysis, ATR(14-period) and the size of the body candle are used to determine the momentum of the candlestick. When the value of candle size is bigger than the ATR value, the analysis concluded that the momentum is higher than the average range. Thus, we can conclude that a continuation of the market structure is highly likely to follow through.
XAUUSD Based on the daily chart:
1. From 15 March to 22 April 2022, the price has failed to close below 1917. That area has been held as support for more than 1 month or 27 trading days.
Finally, on 25 April 2022, the bearish daily candle closed below support 1917 with momentum indicating the first signal of a downtrend market. Where the value of bearish candle size is higher than the ATR value (34.3 > 28.5).
2. When the market is forming Lower High and Lower Low, a descending trendline is formed to observe how the price would react to the trendline. It is either the price would respect or break the trendline. It is the opportunity to enter a short position. As professional traders, we have to patiently wait for the confirmation and confluences.
2. On 16 May, the price rebounded from 1790 to 1870. 1870 is the 38.2% Fibonacci retracement level. When the price failed to break and close above the 38.2 Fib level, the market was ranging between 1830 to 1870 for 3 weeks or 16 trading days.
Finally, on 13 Jun 2022, there is a bearish engulfing candle closed below the 1830 support area with momentum above average. This is the confirmation to enter short positions because the bearish engulfing candle:
- respected the descending trendline.
- rejected at fib level.
- closed below 1830 support
- closed below 200 daily EMA
- momentum above average (52 > 27.3)
This setup has 1:2 RR. But, if you can get a second entry at 1849, your RR could improve to 1:3.5
Personally, I'm taking a 1% risk at 1820 and another 1% risk at 1850 with both Stoploss at 1880 and Target Profit at 1700. So, I'm risking 2% to make 7%.
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