XauUsd- Trend reversal? Will it drop under 2200?

10 juin

Last week was volatile and, most importantly, an interesting week for XAU/USD traders. In light of new developments in the market, a more in-depth analysis is needed to address the question of whether gold will drop to 2200.

Weekly Chart Analysis:

Initial Observations:

As we can see, 2024 started with consolidation and a slight correction of the initial leg up. Since mid-February, there has been a very strong bullish leg, approximately 5,000 pips. During this bull leg, there was only a brief consolidation and no significant correction.

Bearish Signals:

After reaching an all-time high, we witnessed a normal correction.
However, things have become very interesting.
The price resumed its upward movement and made a new all-time high, but the bulls were unable to keep the price above 2400.


The following week, we saw a very strong bearish engulfing pattern, a small pin bar after, followed by an extremely bearish candle last week.
This long-tailed bearish candle engulfed the previous pin bar, indicating a probable top formation.


The price stopped on Friday at a level of support and I believe that in the coming weeks, we will see a drop below this support, potentially leading to a significant drop to the level of consolidation.

Daily Chart Analysis:



Detailed Observations:

On the daily chart, the level of support is more evident.
We saw an initial drop and a new attempt to conquer 2400, followed by another drop and consolidation.
On Friday, we observed an extremely large bearish engulfing candle, with the price stopping at a level of support.


There is a potential head and shoulders pattern with the neckline around the current support level.
If we consider this head and shoulders pattern and take the measured target, it suggests a drop below 2200, around 2180 zone.

Current Expectations:

At this moment, we are at a very important level of support.
After this nearly 1,000 pip drop from the top, I expect a correction to test the resistance zone towards 2325, followed by a continuation to the downside and a break below support level (2285 zone).


Trading Strategy:

Aggressive and Conservative Approaches:

Aggressive traders might look to buy around the current support level but should be cautious due to the very aggressive nature of Friday's drop.
There are multiple resistance levels to consider as targets, starting at the psychological level of 2300 and finishing with 2325 important one.

However, in my opinion, a more conservative approach is better: selling rallies rather than buying at the support level.


Conclusion:

My outlook on gold is extremely bearish.
In the coming weeks, I expect a drop to 2200 and potentially below.

10 juin

Note

As explained in "Current Expectation", I expect a correction.
This correction from support is underway and XauUsd is trading at 2307 at the time of writing.
Swing traders should look around 2325 for short trades, short term trader at the same level for closing existing trades.

10 juin

Note

At this moment, XauUsd is consolidating above 2300.
As I said, a correction could be expected and at this moment seems underway.
2285-2290 acted as support and we have a small double bottom in this zone (short-term chart)
The neck-line is broken and acted recently as support
The measured target for the pattern is 2315-2318 zone which coincides with last week's support.
Bulls should be aware that they trade against the trend though