Trades Being Held Over the Weekend

In my last gold trade review post, I mentioned how I closed the position with the intention to reopen. This was due to the long weekend. My trades last week were a bit of an exception. While the decision was primarily based on the observation of technical levels, I did have some confirmation from fundamental influences.
I'm not much of a macro-economics person expert, but I do try to capture some of the key themes in the markets.

Specifically, the fundamentals that I've observed with the trades that I looked at last week and chose to hold over the weekend:

As you can see, there are a couple of reasons why the markets were fairly optimistic last week. Specifically, this was seen with the equities and futures markets. While I have access to the CFD equivalent of the futures market, I rarely take these trades.

Keeping this in mind, let's jump right into my first trade.

Gold 1-Hour

Admittedly, the 4-hour chart is probably better for showing this double-top. I don't strictly use the technical definitions of price action patterns, but rather I focus on explaining what the order flow information is telling me (based on the filled orders).

Trade details #1:
  • Sell @ 1,706.29
  • Stop Loss @ 1,741.00

Trade Analysis:

  1. Based on fundamental factors, we saw optimism in the equity and futures markets. This was largely lifted by the news that a cure for the coronavirus is underway. I won't go into the specifics as I strive to understand the broader fundamental themes instead of the nitty gritty. I don't know who is "in the lead" with the cure or the stage Gilead is at with their trials. I'm focused on the masses taking this in as good news and timing my trades to ride the momentum based on price action.

    As equity markets rallied, safe haven securities such as gold took a tumble. This is essentially what I observed.
  2. Regarding my previous gold long position, I already closed it at a loss. There's no point in trying to ride out my previous trade when the price action signal has changed.

    What exactly has changed? Gold was held supported at the $1,710 level for quite some time before finally breaking below this neckline. On the morning of March 16th, gold soared higher and failed to sustain it. Since it sold back down, this was an indication that selling pressure is keeping it subdued.

    I entered this trade just as price broke below the neckline. I'm not a believer that whole stop loss trigger play. It's more so on the fact that price has topped out and is creeping lower.
Trade Review:
  1. From a risk management perspective, I think this trade was solid. I stuck with a 1% risk and a wide enough stop loss.
  2. I also adequately performed my macro/fundamental analysis and accompanied it with technicals.
  3. One consideration I found out afterward from an account I follow on Twitter, I may be making a retracement play instead of a reversal. However, what's important for me to remember is that I don't know if they're right and I'm wrong. It's possible that both of us are right and also possible that both of us are wrong. This largely depends on how we manage the trade. I'll share a chart to show what I found out.
Gold 1-Day

Heads and shoulders pattern? If you look at the daily timeframe, you'll see that gold is essentially retracing rather than making a trend reversal. What sucks for me is that there is a conflicting viewpoint presented by someone else. From a psychological standpoint, it's very easy to want to back out of your trade and listen to the other person. However, there are a few things to keep in mind:

  1. Who says they're right? They may have a better track record than me, but they could be wrong as well.
  2. Conflicting viewpoints can still make you money. I don't know how long he's been holding the trade and he doesn't know how long I'm holding the trade. I could easily get out and reverse my direction as soon as I sense selling weakness.
  3. Fundamentally driven. Technical analysis essentially helps you set rule-based entries and risk management. It's not designed to predict the future. There's absolutely no way of knowing that the H&S pattern that we've seen will lead to a consensus accumulation of more gold positions.

Here's my next trade with AUDCAD.

AUDCAD 4-Hour

Trade Details:

  • Sell @ 0.89196
  • Stop Loss @ 0.9025

Trade Analysis:

  1. Note how this pair creeped up to the March 11th highs. Instead of making a very strong bullish move upwards to this level, it inched higher. Parabolically speaking, the rate of change has also slowed down.
  2. As priced tested the 0.8960 level, we're seeing a strong bearish bar. The way I see it, buying pressure has weakened as this pair inches higher. By entering now instead of waiting for a confirmation, I'm optimizing my risk in the form of tighter stop loss placement and great move propensity.

Trade Review:

  1. This is a trade that has potential for scaling into a bigger position (within my risk parameters, of course). At the time that I took this trade, I risked 1%. If this pair is being held resisted, I would be looking for a later opportunity to add another 1% risk with a follow up trade.
  2. I currently still stand by my actions of not waiting for confirmation. In a sense, we did see preliminary confirmation with how the rally has slowed as it neared the major 4-hour level. With caution, my entry consisted of 1% risk instead of a full 2%.

The final trade that I took was on the GBPUSD pair.

GBPUSD 4-Hour

Trade Details:

  • Buy @ 1.24914
  • Stop Loss @ 1.23679

Trade Analysis:

  1. Largely looking at the pull back price action. After a huge sell off, this pair began to recover. It retraced back to the 1.2430 level and held supported. Specifically, notice the three red bars just to the left of the white arrow. This was what I observed. Price sold off to this level, bounced, and failed to drive further lower.

Trade Review:

  1. One concern with this pair was the overall trading range. Since it wasn't very large, it's entirely possible that we may not see an explosive move at all. Instead, this pair may dwindle until the next big fundamental release driving it with an unpredictable move. I largely don't think this is likely as there is a daily pullback structure as well. Take a look at the chart below.

GBPUSD 1-Day