Selling gold on breakdown of 3,190 level

Over the past two and a half months, gold has been rising rapidly. Since early February, even before the new US administration's public statements on the scope of the proposed trade duties, many investors grew concerned about looming market risks. At that point, gold took its classic role of a safe-haven asset, protecting against multiple risks caused by lots of reasons, such as a potential collapse of the US stock market, significant capital outflows from most financial instruments, as well as the need to hedge against inflation and currency depreciation. Previously, Trump had repeatedly stressed the need to weaken the US dollar against a basket of currencies. In addition, the Fed may go for monetary easing to stimulate economic growth, even amid rising inflationary pressures.

The latest bullish wave began on April 9, resulting in the quotes breaking through the local high at $3,170 per ounce and forming one of the following chart reversal patterns: “head and shoulders”, '‘shelf’, “narrowing triangle.” These patterns may share a common horizontal base at the level of 3,190, which could act as technical support. This would be confirmed if the price repeatedly tests the level from above. Once support is firmly established and clearly visible on the chart, the stage will be set for a potential breakdown.

For a better profit/risk ratio in this bearish pattern, traders are advised to sell gold upon a confirmed breakdown of the 3,190 level, as the algorithmic models involved in gold trading will identify this as a clear breakdown of the horizontal level and create a strong downward momentum.

The overall recommendation is to sell gold when the price hits the level of 3,190.

Profits should be taken at the level of 3,165. A Stop loss could be set at the level of 3,230.

The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.