Trade Setup:
Instrument: XAU/USD (Gold Spot vs. U.S. Dollar)
Trend Direction:
1D Chart: The daily chart shows a pullback from the recent highs around $2,525, and the price is currently sitting near $2,488. The next key support is around $2,470 to $2,475. The overall trend is bullish, but we are seeing a retracement.
1H Chart: The hourly chart reflects a recent lower high and lower low structure. The price action suggests continued downward pressure, but the price is nearing a potential support zone around $2,475.
Fractals and Levels:
Support Level: The $2,475 zone is the next significant support based on both the 1D and 1H charts.
Resistance Level: The $2,500 to $2,505 area represents a significant resistance zone where price could face liquidity.
Fibonacci Levels: The 61.8% retracement level near $2,490 could provide a short-term bounce or resistance point.
Volatility Consideration: Price volatility has been moderate, so distances between entry, stop-loss, and take-profit levels will be adjusted accordingly to manage risk effectively.
Trade Idea:
Entry Price: $2,475 (This level is near the support zone and offers a low-risk entry for a potential bounce back or retracement).
Stop Loss: $2,465 (Placed just below the support level to minimize downside risk).
Take Profit: $2,500 (This is within the resistance zone, and the Fibonacci level aligns with a high-liquidity area where retracement is expected).
Reward-Risk Ratio:
Risk: $2,475 (Entry) - $2,465 (Stop Loss) = $10
Reward: $2,500 (Take Profit) - $2,475 (Entry) = $25
Ratio: $25 / $10 = 2.5 (which meets the requirement of more than 1.5).
Trailing Stop Loss Adjustment:
First Adjustment: Once the price reaches $2,485, move the stop loss to break even at $2,475 to eliminate risk.
Second Adjustment: When the price reaches $2,490, adjust the stop loss to $2,480 to lock in some profits.
Final Adjustment: If the price approaches $2,495, move the stop loss to $2,485 to secure further gains.
Execution:
Order Type: Place a limit buy order at $2,475.
Target Price: $2,500.
Stop Loss: $2,465.
Trade Probability:
Given the current retracement and the proximity to a support zone, this trade has a good probability of success if the price holds the $2,475 support level. However, if the support level is broken, a deeper correction may occur, and it would be advisable to avoid this trade until more favorable conditions arise.