Gold April 15 Minute Futures Possible XABCD Pattern

The D point is unknown for this XABCD pattern currently in progress. In fact, the D point may not set up at all. But if it does, this is a nice Risk/Reward trade and a good probability of hitting the .618AD target. But if you're not familiar with AB/CD or XABCD patterns, this will be very complicated and confusing. These are explained all over the internet.

So far, we've established the X, A, B, and C points:

X=1757.40

A=1704.60

B=1734.60

C=1718.50

D=?

The 2 possible ideal entry points would be a swing high where CD=AB, which is where D=1748.50, and at the .786XA, which is 1746.10.

Here are the possible targets based on each of the 2 ideal D points:

D@AB/CD=1748.50

.5AD=1726.55

.618AD=1721.3698

.786AD=1713.9946

1.618XA=1671.9696

D@.786XA=1746.10

.5AD=1725.35

.618AD=1720.453

.786AD=1713.481

1.618XA=1671.9696

So, since the .786XA is easier to hit, because its closer to the current price action, we'll use a Sell Limit order at 1746.10. 

We'll use the .618AD as the target. Since the target for the D at CD=AB will be easier to hit because it'll be closer to that price action, we'll use 1721.50 as the initial target. We'll adjust the target when the actual D point is known, assuming this pattern develops ok.

We'll use a Stop of 1757.60, just outside the X point.

So, I entered the following order for MGC mini Gold Futures contract ($10/pt):

Entry: Sell Limit 1746.00

Target: Buy Limit 1721.50

Stop: Buy Stop 1757.60

This order will be working while I'm doing other things, like sleeping. When I learn its been filled, I'll recalculate the .618AD target based on the actual D point. The Stop will remain the same. Until then, here's the Risk/Reward based on the estimated entry and target. 

Risk: 1746.00-1757.60=-11.6*$10/pt=$116.

Reward: 1746.00-1721.50=24.5*$10/pt=$245.

R:R=245/116=2:1 which is better than several of our recent trades, and a good ratio.