Analysis of XAUUSD (Gold/USD), 1-Hour Time Frame
Overview of Current Market Structure: Wyckoff Distribution
The chart illustrates a classic Wyckoff Distribution schematic, broken down into several phases (A, B, C, etc.), with price action showing signs of exhaustion at the top and the transition into a bearish move. This pattern suggests a re-accumulation of selling pressure, hinting at an impending markdown phase. The distribution schematic indicates that smart money operators are unloading positions and a new bearish trend is likely to form.
Key Phases & Concepts:
Phase A: Preliminary Supply (PS)
AR (Automatic Rally) and ST (Secondary Test): Price makes initial attempts to push upward but fails to break through resistance with conviction. This marks the early stages of weakening demand.
SOW (Sign of Weakness) in Phase B is notable and is crucial as a precursor to the breakdown into Phase C.
Phase C: Upthrust After Distribution (UTAD)
The false breakout to the upside (UTAD) marks the last point of supply (LPSY). This is a trap for late buyers, after which price quickly reverses back below key resistance levels.
Elliott Wave Structure Overlay
The chart also incorporates an Elliott Wave count, with an expected five-wave impulse wave down, indicating a bearish trend. Wave (i) has completed, and the price is currently within a corrective Wave (ii), potentially forming a zigzag correction.
Key Levels:
Wave (i) completion around 2610.79, followed by a potential retracement to the 0.618 Fib level at approximately 2654.86 for Wave (ii).
A projected bearish move follows with Waves (iii), (iv), and (v) leading to new lower lows around Wave 5 targets (roughly 2540–2535).
Price Volume Analysis:
The Point of Control (POC), representing the highest volume traded level, is shown at 2613.84, acting as a crucial resistance point. There are strong selling orders stacked at this level, suggesting that any move upward will face significant headwinds, reinforcing the bearish outlook.
SMC (Smart Money Concepts):
In terms of Smart Money Concepts, the market has entered a premium area near the 0.618 Fibonacci retracement level, which aligns with the last point of supply (LPSY) in Wyckoff terms. The expectation is for price to turn back down from this premium zone. The presence of a Bearish Order Block further solidifies this area as a point of reversal.
ICT Methodology: Market Maker Sell Model
The ICT (Inner Circle Trader) methodology also seems relevant here, with the potential for a Market Maker Sell Model (MMSM). The key concept revolves around creating liquidity through buy-side liquidity traps (UTAD) before inducing a markdown phase. This aligns with the Wyckoff logic as well.
Expectations for the Next Two Weeks:
Retracement to the 0.618 Fibonacci Level:
Price is expected to rally temporarily to the 2654-2661 zone, which corresponds to the 0.618 Fibonacci retracement level of Wave (i). This will likely act as a Last Point of Supply (LPSY), where heavy selling will resume.
Completion of Wave (ii) and Impulse Down (Wave iii):
Once Wave (ii) completes near the 0.618 retracement, the next leg down (Wave iii) will likely follow. This should take price below the previous low of 2610, targeting a significant lower zone around 2540-2535.
Break Below Support and Continuation of Wyckoff Distribution:
A break below key support levels, specifically around 2613.84, will further confirm the bearish scenario. Following the completion of Wave (iii), smaller corrections (Wave iv) may occur, but the overall direction remains downward.
Potential Targets:
The ultimate target for the bearish leg will be the area around 2535-2540, where price may find temporary support and consolidation after completing the five-wave impulse.
Key Indicators to Watch:
Volume: Look for increasing volume on down moves, confirming the distribution phase.
Fibonacci Retracement Levels: 0.5 (2645.86) and 0.618 (2654.86) are key areas of interest for potential reversal.
POC at 2613.84: This is a crucial level, which if breached, will further strengthen the bearish outlook.
Conclusion:
Over the next two weeks, the bias remains strongly bearish. The combination of Wyckoff Distribution, Elliott Wave, and Smart Money Concepts suggests that the market is preparing for a major markdown. Any upward movements should be viewed as retracements or opportunities to enter short positions, with key resistance zones to watch around 2654. The target for this move is likely the 2535-2540 area, with the potential for further downside depending on macroeconomic events.
The chart illustrates a classic Wyckoff Distribution schematic, broken down into several phases (A, B, C, etc.), with price action showing signs of exhaustion at the top and the transition into a bearish move. This pattern suggests a re-accumulation of selling pressure, hinting at an impending markdown phase. The distribution schematic indicates that smart money operators are unloading positions and a new bearish trend is likely to form.
Key Phases & Concepts:
Phase A: Preliminary Supply (PS)
AR (Automatic Rally) and ST (Secondary Test): Price makes initial attempts to push upward but fails to break through resistance with conviction. This marks the early stages of weakening demand.
SOW (Sign of Weakness) in Phase B is notable and is crucial as a precursor to the breakdown into Phase C.
Phase C: Upthrust After Distribution (UTAD)
The false breakout to the upside (UTAD) marks the last point of supply (LPSY). This is a trap for late buyers, after which price quickly reverses back below key resistance levels.
Elliott Wave Structure Overlay
The chart also incorporates an Elliott Wave count, with an expected five-wave impulse wave down, indicating a bearish trend. Wave (i) has completed, and the price is currently within a corrective Wave (ii), potentially forming a zigzag correction.
Key Levels:
Wave (i) completion around 2610.79, followed by a potential retracement to the 0.618 Fib level at approximately 2654.86 for Wave (ii).
A projected bearish move follows with Waves (iii), (iv), and (v) leading to new lower lows around Wave 5 targets (roughly 2540–2535).
Price Volume Analysis:
The Point of Control (POC), representing the highest volume traded level, is shown at 2613.84, acting as a crucial resistance point. There are strong selling orders stacked at this level, suggesting that any move upward will face significant headwinds, reinforcing the bearish outlook.
SMC (Smart Money Concepts):
In terms of Smart Money Concepts, the market has entered a premium area near the 0.618 Fibonacci retracement level, which aligns with the last point of supply (LPSY) in Wyckoff terms. The expectation is for price to turn back down from this premium zone. The presence of a Bearish Order Block further solidifies this area as a point of reversal.
ICT Methodology: Market Maker Sell Model
The ICT (Inner Circle Trader) methodology also seems relevant here, with the potential for a Market Maker Sell Model (MMSM). The key concept revolves around creating liquidity through buy-side liquidity traps (UTAD) before inducing a markdown phase. This aligns with the Wyckoff logic as well.
Expectations for the Next Two Weeks:
Retracement to the 0.618 Fibonacci Level:
Price is expected to rally temporarily to the 2654-2661 zone, which corresponds to the 0.618 Fibonacci retracement level of Wave (i). This will likely act as a Last Point of Supply (LPSY), where heavy selling will resume.
Completion of Wave (ii) and Impulse Down (Wave iii):
Once Wave (ii) completes near the 0.618 retracement, the next leg down (Wave iii) will likely follow. This should take price below the previous low of 2610, targeting a significant lower zone around 2540-2535.
Break Below Support and Continuation of Wyckoff Distribution:
A break below key support levels, specifically around 2613.84, will further confirm the bearish scenario. Following the completion of Wave (iii), smaller corrections (Wave iv) may occur, but the overall direction remains downward.
Potential Targets:
The ultimate target for the bearish leg will be the area around 2535-2540, where price may find temporary support and consolidation after completing the five-wave impulse.
Key Indicators to Watch:
Volume: Look for increasing volume on down moves, confirming the distribution phase.
Fibonacci Retracement Levels: 0.5 (2645.86) and 0.618 (2654.86) are key areas of interest for potential reversal.
POC at 2613.84: This is a crucial level, which if breached, will further strengthen the bearish outlook.
Conclusion:
Over the next two weeks, the bias remains strongly bearish. The combination of Wyckoff Distribution, Elliott Wave, and Smart Money Concepts suggests that the market is preparing for a major markdown. Any upward movements should be viewed as retracements or opportunities to enter short positions, with key resistance zones to watch around 2654. The target for this move is likely the 2535-2540 area, with the potential for further downside depending on macroeconomic events.
Note
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