XAUUSD Gold Rally Is Coming To An End So We Closed Our Long Trade

Gold rallied strong in the past few weeks. But the gold rally is coming to an end now. Last time we informed you well in time that gold XAUUSD is about to take a turn from being bearish to bullish. This time we inform you that gold rally is coming to an end as there is an inside bar on the daily chart. Take a look at the following screenshot!

Gold Rally

In the above screenshot, you can see the 1-2-3 pattern clearly marked out that signaled the start of the uptrend. Our entry was at $1060.88 and the stop loss was at $1058.00. After that gold rallied hard in the next few weeks and touched the level of $1263.44. The next day it has made an inside bar which is a strong signal that XAUUSD rally is now over. So we close the trade at $1238.79.

In the above screenshot, you can see in the last few days, one bullish daily candle was followed by another bullish daily candle. So we knew trend is going strong and kept the trade open. Chart reading is an essential skill that you should learn and master if you are thinking of becoming a full time trader. If you are new to chart reading, you should watch these video tutorials that explain in detail how you should read the charts correctly. By just looking at the charts, you can judge the direction of the market. You don’t need to use any indicators. Price action is the best indicator. Reading candlestick correctly on the daily chart can help you make good trading decisions.

Candlesticks are important price action signals. You just need to master a few candlestick patterns that tell you when the trend is going to continue and when the trend is going to reverse itself. Inside bar is an important candlestick pattern. It is both a trend continuation signal as well as a trend reversal signal. You just have to look at the overall chart what the inside bar is saying. In the above chart, you can see an inside that is parked right in the middle of the previous long bullish candle. Technical term for this type of inside bar is a Bearish Harami. A Bearish Harami is a strong trend reversal signal. You can watch this video that explains one candlestick pattern that changed everything for me.

In the screenshot above we have shown the 1-2-3 pattern. This 1-2-3 pattern is a strong trend reversal signal. 1-2-3 pattern forms when price returns to test the previous level of support/resistance and is unable to break it. This is a signal that price is about to reverse itself as it couldn’t break through a previous support/resistance level. So you should master the skill of correctly identifying candlestick patterns and chart patterns. This will make you into a consistently winning trader. Always look for trades with reward to risk of at least 5:1. In the above trade the reward to risk was huge as the initial entry had a very low risk. How did we identify the entry? By using our skill of candlestick analysis. The Doji was used as the entry candle.