Top trade of the month: Laura caught a drop in gold and made $4,768 on a short
Gold is one of those markets that can deliver significant price moves within just a few hours. That's exactly what trader Laura took advantage of. On her virtually funded ProTrader account with $100,000 in capital, she opened a short position on XAU/USD and made $4,768 from the drop that followed.
What makes her trade interesting is that it wasn't a reckless sell after the first red candle. Laura followed the price action, recognized the fading buying momentum, and took advantage of the moment when the short-term market structure began to turn in the sellers' favor.
Let's look at what was happening in the gold market before her entry, which technical signals could have been behind opening the SELL position, and why it made sense to close the trade exactly in that area.
What happened before the entry?
Gold had been fairly volatile in the previous trading period. After a sharp rally and the sell-off that followed, the price stabilized and started forming an intraday consolidation range. On the 5-minute XAU/USD chart, you could see repeated attempts to move higher, but they gradually became less and less convincing. The price came close to the $4,185 per ounce area several times, but couldn't hold above it.
This area was an important short-term resistance. With every new attempt to break through it, selling pressure appeared and the upward moves gradually lost momentum. While buyers initially tried to push the price higher, the market started showing signs of exhaustion. Laura could especially watch the repeated rejection of higher prices, the failed attempts to break the resistance, and the gradual formation of lower local highs.
The nature of the consolidation itself mattered too. The price was still moving within a relatively wide range, but its reaction at the upper boundary was becoming less and less convincing. A situation like this often comes before a change in the short-term trend. If buyers can't break through resistance and sellers gradually start pushing the price back toward the lower boundary of the range, the original consolidation can turn into a setup for a bigger drop.
Entering the market
Laura opened a SELL position at the moment when the price started turning away from the upper boundary of the consolidation range and the short-term market structure was gradually shifting in the sellers' favor. From a technical point of view, it was a trade based on a rejection of resistance and the expectation that the price would return to the lower levels of the trading range.
One of the main signals was the formation of lower highs. After the failed attempt to rise toward the $4,185 area, the price gradually started losing ground. Weaker bounces followed, which couldn't break above the previous local highs. This suggested that buyers no longer had enough strength to restart the uptrend and that supply was starting to take over the market.
Another important factor was the break of short-term supports inside the consolidation range. Once the price started leaving the previous area of balance to the downside, the likelihood of a continued decline increased. Laura could therefore use a combination of several technical factors: repeatedly rejected resistance, fading bullish momentum, lower local highs, and the subsequent break of the support structure.
So it wasn't just a guess that gold had to fall. Laura had specific price signals that supported the scenario of a continuing decline. At the same time, she was trading on an intraday horizon, where similar changes in structure can lead to fast moves and offer interesting profit potential.
Use the code NEW20 at checkout and save $109.80
For comparison: Laura's single trade was worth more than ten times the price of the challenge.
Exiting the market
Laura closed her position around $4,163 per ounce, near the lower boundary of the marked trading range. From a technical point of view, it was a logical place to take profit. The price had reached an area where buying activity had appeared before and where the decline could temporarily stall.
It was exactly in this area that an attempt to stabilize became visible. After the gradual decline, the price started bouncing up and briefly returned to higher levels. Laura didn't have to wait for further confirmation that the market was really turning. She took her profit when the price reached a support area that could be identified in advance and when the ratio of potential further gain to risk started to worsen.
Interestingly, after she closed the trade, gold first bounced up more noticeably, but later continued to fall and went considerably lower. That doesn't take anything away from the quality of Laura's decision, though. In trading, the goal isn't to catch the absolute bottom or top, but to take profits consistently based on a pre-defined plan. Laura closed the position in an area that had a clear technical meaning, and protected the profit she had already made.
The result? $4,768.
Want to trade like Laura?
Laura traded on a ProTrader account with $100,000 in virtual capital. You can try it too:
Use the code NEW20 at checkout and save $109.80
For comparison: Laura's single trade was worth more than ten times the price of the challenge.
My job is to make sure everything works exactly as it should for our traders. After testing ProTrader Swing, I switch to real swings with kettlebells at the gym, or dive into digital illustration and video games to recharge. Favorite platform: cTrader. Favorite challenge: ProTrader Swing.
