Good evening guys,
The USD is turning higher after the relentless selling over the past couple of weeks, there is potentially a long way for the greenback to travel.
This has bought my attention to gold due to the inverse correlation.
With this set up the risk v reward is extremely high and keep in mind this set up may take a few days or week to play out. Due to the high risk to reward you can use a slightly lower risk % on this position.
Gold – 4 Hour Charts
Technically there is a head and shoulders formation with the shoulder line at roughly 1738 and neck line at 1670. Generally speaking a head and shoulders formation can break below the neck line the same depth as the head. The major highs are continuing to form lower each time which indicates a bearish trend.
This is a very big ask, however if we see a surge in the USD gold may take a tumble.
Trade setup: SELL GOLD – Market execution, current price 1725.0, stop loss 1748.0 and take profit 1636.0
Stop loss: 230 pips
Take profit: 890 pips