Gold has been in a strong bullish trend, recently reaching a key resistance level at 2946. The question that should always guide your analysis when following price action is: What is the objective of price?
Analyzing Price Action
If the bullish objective was to reach this resistance level, we should be prepared for a potential reversal. However, looking at the daily timeframe, the trend remains intact since the latest demand zone of the bullish expansion has not been broken.
Despite this, strong selling pressure emerged around the resistance level. On the 4-hour timeframe, price broke structure with high momentum, grabbing liquidity and mitigating an origin demand zone. This move suggests a critical decision point for the market.
Will Gold Buy or Sell Today?
Key Scenarios to Watch
- Bullish Continuation:
- If the objective of the drop was to grab liquidity and mitigate the demand zone, this phase may be complete, setting the stage for the bullish trend to continue.
- A strong confirmation would be a break and close above the previous lower high (LH), signaling that buyers are in control.
- Potential Reversal:
- If the bullish trend’s objective was met at the 2946 resistance level, this drop could be the beginning of a larger downtrend.
- Currently, price is testing the origin of the bearish move, where high selling momentum was previously seen. This is a key area to watch for potential sell opportunities with a favorable risk-to-reward ratio.
Final Thoughts
At this stage, the market is at a critical juncture. Waiting for confirmation is crucial—whether it’s a break above the LH for bullish continuation or rejection at the bearish origin for further downside movement.
Stay patient, follow price action, and trade with a clear strategy.
What’s your outlook on gold? Drop your thoughts in the comments below!
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