Trade Review: Metals
2022 has been a good year so far despite the fact that my P&L is flip-flopping around even. This is because I've been aggressively filtering a lot of pairs to find the ones with the cleanest setups.
More specifically, I've been okay with the fact that there are some days where I don't need to take a trade. This is something that I wasn't able to do previously as I would have the urge to force a trade.
I was watching this chart live just as price breached below the 1,975 hour level. As soon as it did, I entered short. Unfortunately, I was forced out of this trade as price reversed back above this level shortly afterward.
The frequency of my trades have reduced in recent weeks due to the undesired volatility with the current situation in Ukraine. Although I missed the run-up on gold and silver, I did spot an opportunity to bet on the reversal.
I entered with 1% risk each since I saw confluence with the price action over on the D1 (daily) and H1 (hourly) timeframes. Let's start off with gold.
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| XAUUSD Daily |
To briefly reiterate, I missed the run-up. No real excuse other than this wasn't a pair I focused on until very recently. After price breached the 2,015.50 level, I noticed that the rally became unsustainable. WTI, or crude, led the selloff so I anticipated that metals would follow.
As explained in my signpost, price rejected the 2,015.50 level as it traded below it the following day. Hopping down to the 1-hour timeframe, I saw a breakout to the downside and decided to capitalize on it.
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| XAUUSD 1-Hour |
I was watching this chart live just as price breached below the 1,975 hour level. As soon as it did, I entered short. Unfortunately, I was forced out of this trade as price reversed back above this level shortly afterward.
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| XAUUSD 1-Hour |
Evaluating this trade now, shorting the downside breakout was not an incorrect decision. However, risking 1% is a bit questionable now that I look at it in hindsight. To fully optimize this trade, I should've taken a 0.5% short to anticipate the breach to the downside. If the breach actually occurs, size up accordingly.
Believe it or not, silver exerted a better signal. This was partially due to the fact that it was lagging behind gold.
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| XAGUSD Daily |
Over on the daily timeframe, I observed a noticeably similar run-up. While the bearish bar on the current day is marginally smaller than the T-1 bar, it still did a good job signifying rejection at the 25.80 level.
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| XAGUSD 1-Hour |
Hopping onto the hourly timeframe, this is where I observed the "better" signal. The lower 25.355 level is the structural neckline that I'm anticipating a breach to the downside. The higher 25.77 level that I plotted was more so for the immediate decision making process.
I preemptively entered a short position anticipating a breach below the 25.355 level. The entry was optimized as price was reversing from a much weaker bounce off of the critical neckline. My plan was simple - once price crosses below 25.355, add more size.
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| XAGUSD 1-Hour |
Unfortunately, I had to scratch this trade at a loss since price reversed and crossed back above my 25.77 level.
Regardless, metals still look bearish to me for the week ahead. My intraday levels will be redrawn after I can observe the Sunday open price action. Follow-up post will come if I do observe something significant.