Gold's Big Trap: The Next Manipulation Setup in XAU/USD
In this detailed analysis of the XAU/USD (Gold/US Dollar) pair on both the monthly (M) and weekly (W) timeframes, we delve into potential price action scenarios for the upcoming two weeks. The market structure suggests we are entering a critical phase, characterized by multiple technical formations including Elliott Waves, Wyckoff phases, and liquidity manipulation zones. This combination allows us to forecast significant price movements, particularly around key liquidity levels and wave completions.
Current Structure and Manipulation Overview:
Wyckoff Phases: The primary framework of the analysis uses the Wyckoff methodology, specifically phases B and C in a potential distribution phase on the monthly timeframe (M). This indicates that we are currently in an area of market manipulation, where institutional players may be trapping buyers before a possible markdown phase. The failure of key support zones will confirm the movement into the next phase of the distribution.
Elliott Wave Structure: The chart is dominated by an ongoing Wave V in both monthly and weekly timeframes. On the higher timeframe, we are potentially nearing the completion of this wave, particularly around the 2,700 area, where Wave 5 (M) could culminate. Meanwhile, within the weekly structure, there are clear subwaves (i)-(v) that suggest the last impulsive wave before a corrective move.
Volume Profile and Liquidity Zones: The volume profile suggests key liquidity levels where large volumes have been transacted. The most critical areas on the downside are the Point of Control (POC) at 2,030 and a significant support zone around 1,870. These levels represent zones where institutional money may re-enter the market or trigger stops, leading to volatility.
Short-Term Weekly Outlook (2-Week Projection):
Immediate Price Action: In the upcoming two weeks, price action is expected to remain volatile within a range that seeks to test liquidity at key levels. On the weekly timeframe (W), the current structure indicates the potential for a short-term pullback towards the 2,000-2,030 zone, which aligns with the volume node and POC (point of control). This zone is likely to act as a support level for a brief period before any further downside is realized.
Key Manipulation Points:
Upside Manipulation: There is a possible liquidity grab targeting the 2,200-2,250 region, where Wave Y in Wave IV (W) is expected to be completed. This area marks a high-probability reversal zone, especially if price briefly breaches this level to trigger stop losses and attract late buyers.
Downside Target: Once this liquidity grab is complete, the market could head towards 1,870, a significant Sell Side Liquidity (SSL) zone. A failure to hold above this level could signal a larger markdown phase, leading to more aggressive selling pressure in the coming weeks.
Potential Wyckoff Spring: A Wyckoff Spring may occur if the price breaks down sharply towards 1,810 or lower, triggering stops and creating the illusion of a breakdown. This could then be followed by a quick reversal, trapping sellers, before entering a consolidation phase. This is consistent with Wyckoff's Phase C, where the market attempts to shake out weaker hands before the final markup phase (if bullish) or markdown (if bearish) occurs.
Key Levels to Watch:
Resistance Levels:
2,200-2,250 (W): Expected area for liquidity sweeps and potential short-term exhaustion of buyers.
2,700 (M): Long-term resistance where Wave V might complete its structure. This level is key for invalidating further bullish momentum.
Support Levels:
2,030 (W): Immediate POC that could hold short-term price action before testing lower levels.
1,870 (W): Critical support zone and liquidity level. A break below this would confirm the continuation of a broader downtrend.
1,810 (W): Wyckoff Spring level where a sharp decline could trap sellers before a reversal.
Elliott Wave Confluence:
From an Elliott Wave perspective, the Wave IV correction currently unfolding within the weekly timeframe (W) is in its final stages. We can expect a final subwave (y) completion towards 2,030, followed by a potential larger corrective move within Wave II of Wave V. The rejection at key resistance and support levels will play a critical role in determining the broader trend. Any failure to hold support at 2,000-1,870 could signal the beginning of a larger Wave V correction that could take prices significantly lower over the medium term.
Conclusion: Preparing for Volatility in the Next 2 Weeks
The XAU/USD pair is expected to undergo a period of heightened volatility over the next two weeks. Traders should be prepared for sharp moves to both the upside and downside as the market manipulates liquidity. The structure suggests a potential downside move, but not before liquidity near 2,200-2,250 is tested.
Key support around 2,030 and 1,870 will be crucial in determining whether a significant markdown phase will begin or if price will consolidate in preparation for a reversal. In the short term, traders should be wary of false breakouts, especially around the Wyckoff Spring levels, as these could trigger quick reversals, trapping both buyers and sellers in the process.
Current Structure and Manipulation Overview:
Wyckoff Phases: The primary framework of the analysis uses the Wyckoff methodology, specifically phases B and C in a potential distribution phase on the monthly timeframe (M). This indicates that we are currently in an area of market manipulation, where institutional players may be trapping buyers before a possible markdown phase. The failure of key support zones will confirm the movement into the next phase of the distribution.
Elliott Wave Structure: The chart is dominated by an ongoing Wave V in both monthly and weekly timeframes. On the higher timeframe, we are potentially nearing the completion of this wave, particularly around the 2,700 area, where Wave 5 (M) could culminate. Meanwhile, within the weekly structure, there are clear subwaves (i)-(v) that suggest the last impulsive wave before a corrective move.
Volume Profile and Liquidity Zones: The volume profile suggests key liquidity levels where large volumes have been transacted. The most critical areas on the downside are the Point of Control (POC) at 2,030 and a significant support zone around 1,870. These levels represent zones where institutional money may re-enter the market or trigger stops, leading to volatility.
Short-Term Weekly Outlook (2-Week Projection):
Immediate Price Action: In the upcoming two weeks, price action is expected to remain volatile within a range that seeks to test liquidity at key levels. On the weekly timeframe (W), the current structure indicates the potential for a short-term pullback towards the 2,000-2,030 zone, which aligns with the volume node and POC (point of control). This zone is likely to act as a support level for a brief period before any further downside is realized.
Key Manipulation Points:
Upside Manipulation: There is a possible liquidity grab targeting the 2,200-2,250 region, where Wave Y in Wave IV (W) is expected to be completed. This area marks a high-probability reversal zone, especially if price briefly breaches this level to trigger stop losses and attract late buyers.
Downside Target: Once this liquidity grab is complete, the market could head towards 1,870, a significant Sell Side Liquidity (SSL) zone. A failure to hold above this level could signal a larger markdown phase, leading to more aggressive selling pressure in the coming weeks.
Potential Wyckoff Spring: A Wyckoff Spring may occur if the price breaks down sharply towards 1,810 or lower, triggering stops and creating the illusion of a breakdown. This could then be followed by a quick reversal, trapping sellers, before entering a consolidation phase. This is consistent with Wyckoff's Phase C, where the market attempts to shake out weaker hands before the final markup phase (if bullish) or markdown (if bearish) occurs.
Key Levels to Watch:
Resistance Levels:
2,200-2,250 (W): Expected area for liquidity sweeps and potential short-term exhaustion of buyers.
2,700 (M): Long-term resistance where Wave V might complete its structure. This level is key for invalidating further bullish momentum.
Support Levels:
2,030 (W): Immediate POC that could hold short-term price action before testing lower levels.
1,870 (W): Critical support zone and liquidity level. A break below this would confirm the continuation of a broader downtrend.
1,810 (W): Wyckoff Spring level where a sharp decline could trap sellers before a reversal.
Elliott Wave Confluence:
From an Elliott Wave perspective, the Wave IV correction currently unfolding within the weekly timeframe (W) is in its final stages. We can expect a final subwave (y) completion towards 2,030, followed by a potential larger corrective move within Wave II of Wave V. The rejection at key resistance and support levels will play a critical role in determining the broader trend. Any failure to hold support at 2,000-1,870 could signal the beginning of a larger Wave V correction that could take prices significantly lower over the medium term.
Conclusion: Preparing for Volatility in the Next 2 Weeks
The XAU/USD pair is expected to undergo a period of heightened volatility over the next two weeks. Traders should be prepared for sharp moves to both the upside and downside as the market manipulates liquidity. The structure suggests a potential downside move, but not before liquidity near 2,200-2,250 is tested.
Key support around 2,030 and 1,870 will be crucial in determining whether a significant markdown phase will begin or if price will consolidate in preparation for a reversal. In the short term, traders should be wary of false breakouts, especially around the Wyckoff Spring levels, as these could trigger quick reversals, trapping both buyers and sellers in the process.
Note
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