Over the past few days, gold has experienced a sharp decline of more than $100. This downturn can be attributed in part to traders securing profits to manage their margins, which are under strain due to the significant drop in major indices. Currently, gold has fallen below the immediate support level at the 23% Fibonacci retracement. However, the RSI is not yet in oversold territory, indicating that further downside movement remains possible.
To optimize risk-to-reward ratios and minimize drawdowns, we prefer to wait for gold to decline further before entering long positions. Our ideal buying zone is below $2,800, as this level coincides with the critical 38% Fibonacci retracement, reinforcing its significance as a potential support area. Given the heightened volatility in the market, we will implement a stop-loss set 3% below our entry point to limit downside risks. On the profit-taking side, we aim to exit below the recent high, targeting approximately $2,940.
By waiting for a deeper pullback, we position ourselves for a more favorable entry, improving our trade setup while aligning with key technical levels.
Profit & Loss
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