Last week’s red candle indicates that the buyers are still not strong enough above 1300. MA10 on weekly chart resisted the upward move, and now we are back at 1280 level to test MA20 once again.
I think that this time MA20 support might be broken. The price needs to go further down to collect more long positions, the best candidate for the next low would be the intersection of weekly cycle low and MA50 around ~1245.
Firstly, the low level_1260 of 6th October needs to be broken. Breaking this level will make a lower low, confirming resumption of the 1356-1260 downtrend.
Looking at the indicators:
Lower line of the (of 2017) on indicator is just below to be tested. Breakout of the channel would mean re-visiting RSI-30 level below.
Both the slow and fast stochastics favor downside move.
Also, we have cross as a further signal.
For your idea I recommend to place SL a bit higher, $6 margin is a big risk. Gold daily volatility is $10-15$, and 6$ margin might be broken even during the session opening hours.
In the near-term past I can say that the trend had one retrace at 0.5 of (1357-1261) on 17.10.2017, one retrace of 0.382 fib of (1357-1261) on 18.10.2017, several retraces at 0.618 fib of (1357-1261) on 18.10.2017, 19.10.2017 and 20.10.2017 and number of retraces in the same period at 0.5 (1204-1357). Hence, the fibs of both legs are important and should be considered. To be honest gold had strong retrace from 0.618 to 0.382 fibs of (1257-1261) due to some fundamental event (Catalonia mess). Than, the gold passed very easy the both 0.5 of (1204-1357) and 0.5 (1357-1261), which shows that they are not very strong levels. It seems that 0.618 and 0.382 fibs are strong. We need to learn the strength of the different fib levels.