This post is a review of the XAUUSD analysis posted on April 29, 2020. The review is aimed at examining the different happenings in the market after the release of the XAUUSD analysis on the 29th of April. This is done so as to gain knowledge and become better traders.
The XAUUSD pair after trending downwards for about 4 trading days from 23 to 28 April hit support with the lowest candle closing at 1694.55. Price bounced from the support, oscillated and later formed a double bottom pattern which was not yet confirmed. This was as at the time of our analysis.
In our analysis, we advised that traders should wait for a confirmation of the double bottom pattern (a candle closing above the neck of the pattern) before taking action.
You can see that in a screenshot of the post below.
We also advised that after taking the trade upon the confirmation of the pattern, traders should place their take profits below the next resistance.
After our analysis, the market turned from around 1710.00 at which it was trading and dropped to around 1699.58. This drop, however, did not nullify the pattern formation. This was because it was still above the highest of the bottoms in the formation at 1697.10.
The market then turned and closed above the neck a couple of hours later, confirming the pattern. Ideally, a trade would have been set at the start of the next hour.
The reason for this is because the market does not obey support-resistance levels as precisely as we plot them. And as I have stated in one of my posts, support-resistance levels should be seen as zones instead of lines.
As can be seen below, the market went close enough to the next resistance to trigger a take profit set before it, but didn’t quite touch the line.
In conclusion, you should learn to trade the market in a way that insulates you from too much exposure. This can be done through proper risk management, and by trading proven strategies.
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