Forex Trading: Gold wide range downside reversal

by Joe Oliver, Forex Trading-Pips

Forex Trading: Gold made a wide range downside reversal Tuesday as traders booked profits following the huge run up. Typically wide range downside reversals see follow through selling as some traders get trapped buying high before the sell off and need to liquidate their losses. Immediate pullback zone on December 2011 gold futures is 1759 to 1828.

Despite yesterdays pullback trend followers trading Gold with Donchian channel breakout are still long the precious metal. Donchian rules exit on a 20 day low, which based on Tuesdays closing price is 1605. One of the reason Donchian’s rules work so well is that they use wide stops which keep outside the market noise.

Forex Trading, Gold Donchian Channels

Forex Trading, Gold Donchian 20 day channels