XAU/USD Trade 20 Oct 10

This was planned as a short-term day trade. I used 3-hourly chart as my higher time frame chart to determine the trend direction, and, 30-min and 5-min chart as my lower time frame charts to execute my trade. Times are indicated in Malaysian time.

As per completed 20 Oct 03.00 hr 3-Hourly bar, slow stochastic (13/3) suggested that XAU/USD momentum was oversold. I expected XAU/USD trend to be sideways to bullish over the next few hours. I waited for XAU/USD to make a correction and a momentum bullish reversal in the 30-min chart to have a buy set-up in place.
XAU/USD made a momentum bullish reversal at 07.30hr 30-min bar after retracing 61.8% of its rally from 02.00hr 30-min bar low to 05.30hr 30-min bar high. I decided to execute my entry on the 5-min chart in order to reduce my capital exposure.
After XAU/USD made an ABC correction to the 76.4% support zone and made a momentum bullish reversal on the 5-min chart, I decided to place a buy stop order 1 pip + spreads above the 06.45hr 5-min bar high(Wave B high) . My order was filled at 1334.86 at 08.06hr after the 06.45hr 5-min bar high (Wave B high) was taken out. Stop-loss was placed at 1330.34 just below the 07.20hr 5-min bar low.
The minimum target for the short term unit is the 50-61.8% retracement zone of the price decline from the 00.00hr 30-min bar high to the 2.00hr 30-min bar low.
A trailing 1-bar low sell order for my short-term unit was placed 1 pip + spreads below the low of the most recently completed 5-min bar after the 50-61.8% target was reached. The last adjustment for the trailing 1-bar low sell order was made below the 09.05hr 5-min bar low.
The sell order for my short-term unit was executed at 1336.53 for a 167 pips gain at 09.12hr after the 09.05hr 5-min bar low was taken out.
I decided to use a trailing 2-bar low stop order on the 3-hourly chart for my long term unit. The last adjustment for the trailing 2-bar low stop order was made at 1337.75 just below the 12.00hr 3-hourly bar low at 18.07hr.

My stop order was executed at 1337.57 for a +271 pips gain at 20.53hr.

Overall, it was reasonable trade for short term hold. I entered at 1334.86 at 08.06hr, exit my short term unit at 1336.53 for a 167 pips gain at 09.12hr and exit my long term unit at 1337.57 for a +271 pips gain at 20.53hr. Remember that the value of 10 pips for XAU/USD is equal to 1 pip for EUR/USD.

Disclaimer:

Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and any information presented in this blog.