Hello traders, this is my market preview for the coming week. If you are a price action trader you will find these useful.
- Gold
The precious metal has put in intersting price action with Friday's pin bar occuring at a key level. There has also been a double top on H4 and there is some nice bearish divergence on the RSI. All these factors suggest that price is likely to drop quite massively during the week. A 200 pip stop above the pin bar high with a potential target of 700+ pips makes this a 3.5R trade and that an exciting prospect. The stop loss distance is quite long though and I would suggest that if you are to take this trade you can use a small lot size and then increase it after retracements. Should the trade go our way, there will inevitably be opportunities to add on to the position (pyramiding) and this makes the trade all the more apealing. Since this is a day chart, this trade is likely to last a couple of weeks should it go our way. There is going to be a test of patience and a temptation to take profits early which has to be contained.
In the long run, there is a chance that price is putting a tripple top and could be set for a massive sell-off. We wait for price to lead, but current indications suggest that the strength of the bulls is spent.
- NZDUSD
After a 700+ rally tthe pair is putting a potential heads and shoulders pattern. The left shoulder and the head have been distinctly formed and the right shoulders seems to be forming. Remember though, that the parten is confimed after the break of the neckline around 0.7240/50. An aggressive entry would be a selling the pair after the first candle that closes below the neckline. A more conservation entry would be to wait for a break of the neckline and selling after the retest of the neckline as support.
