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Long Gold at Market

Long Gold at Market

Long Gold at Market

We discussed the context behind this setup in the article, Gold Prices Still Flagging, Fall to Deeper Support. While Gold prices are continuing to work within the two-month downward sloping channel, prices have run down to the level of support that we’ve been watching around the $1,312 level. This is the 50% Fibonacci retracement of the post-Brexit move, while also being near the swing-low formation in Gold prices in mid-September.

While the longer-term, bigger-picture setup in Gold is still working, this current trade can be a way to take a bullish (trend-side) setup within the flag formation.

Stops on the position are set to $1295 to take on approximately $16 of risk, and initial targets can be set to the 38.2% Fibonacci retracement of the post-Brexit move at $1327.57 to get a slightly better than 1-to-1 risk-reward ratio. The secondary profit target is set at $1,342.44, and should that level be met in short order, a tertiary profit target can be set to the July high at $1,375.

--- Written by James Stanley, Analyst for DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.