Overview
This chart illustrates a high-probability bearish setup for XAUUSD based on the breakdown of a rising wedge pattern. Rising wedges typically signal a potential reversal or correction, especially when they occur near a resistance zone and are followed by lower highs and diminishing bullish momentum.
🔍 Technical Breakdown
📐 Rising Wedge Pattern
The price of gold has been rising within a narrowing wedge, forming higher highs and higher lows but within converging trendlines.
This structure generally suggests weakening bullish momentum, and a breakdown is often followed by sharp bearish movement.
The breakdown from the wedge is already starting to form, as price struggles to make new highs near resistance.
🟥 Resistance Level (~3,280 – 3,300)
This area has historically acted as a supply zone.
Recent candlestick wicks show clear rejection in this area, confirming the presence of strong selling pressure.
Price failed to break above this level convincingly, indicating buyers are losing control.
🟩 Support Level (~3,200 – 3,215)
This zone provided a short-term base before the wedge formation.
If the wedge breaks, price may retest this zone on the way down.
If broken, this support could flip into resistance during a pullback.
🎯 Trade Setup
Bias: Bearish
Pattern: Rising Wedge
Timeframe: Suitable for short-term to swing trades (1H – 4H)
✅ Entry Point
Enter short on confirmation of a wedge breakdown (strong bearish candle close below the lower trendline).
Conservative traders can wait for a retest of the broken trendline for additional confirmation.
📉 Target
Primary Target: 3,166.10 – Measured move from wedge height and also aligns with a previous support area.
This area could act as a profit-taking zone as it represents both technical and psychological support.
🛑 Stop Loss
Place SL above the wedge resistance, around 3,313.69.
This protects against false breakouts or unexpected bullish reversals.
⚠️ Risk Management
Only risk a small percentage of capital (1–2%) per trade.
Ensure confirmation before entry – avoid entering early on low-volume breakdowns.
Consider scaling out partial profits near the support zone before the full target is hit.
🔧 Confluence & Validation
The setup aligns with basic price action principles: lower highs at resistance and exhaustion of bullish momentum.
Volume tends to drop during wedge formation and pick up during breakout – monitor volume for confirmation.
RSI or MACD divergence may further validate the bearish momentum.
🏷️ Conclusion
This rising wedge on XAUUSD presents a textbook short setup with a favorable risk-to-reward ratio. The structure, resistance zone, and loss of momentum indicate a potential shift to the downside. Traders should watch for confirmation before entering and use disciplined stop-loss management.
This chart illustrates a high-probability bearish setup for XAUUSD based on the breakdown of a rising wedge pattern. Rising wedges typically signal a potential reversal or correction, especially when they occur near a resistance zone and are followed by lower highs and diminishing bullish momentum.
🔍 Technical Breakdown
📐 Rising Wedge Pattern
The price of gold has been rising within a narrowing wedge, forming higher highs and higher lows but within converging trendlines.
This structure generally suggests weakening bullish momentum, and a breakdown is often followed by sharp bearish movement.
The breakdown from the wedge is already starting to form, as price struggles to make new highs near resistance.
🟥 Resistance Level (~3,280 – 3,300)
This area has historically acted as a supply zone.
Recent candlestick wicks show clear rejection in this area, confirming the presence of strong selling pressure.
Price failed to break above this level convincingly, indicating buyers are losing control.
🟩 Support Level (~3,200 – 3,215)
This zone provided a short-term base before the wedge formation.
If the wedge breaks, price may retest this zone on the way down.
If broken, this support could flip into resistance during a pullback.
🎯 Trade Setup
Bias: Bearish
Pattern: Rising Wedge
Timeframe: Suitable for short-term to swing trades (1H – 4H)
✅ Entry Point
Enter short on confirmation of a wedge breakdown (strong bearish candle close below the lower trendline).
Conservative traders can wait for a retest of the broken trendline for additional confirmation.
📉 Target
Primary Target: 3,166.10 – Measured move from wedge height and also aligns with a previous support area.
This area could act as a profit-taking zone as it represents both technical and psychological support.
🛑 Stop Loss
Place SL above the wedge resistance, around 3,313.69.
This protects against false breakouts or unexpected bullish reversals.
⚠️ Risk Management
Only risk a small percentage of capital (1–2%) per trade.
Ensure confirmation before entry – avoid entering early on low-volume breakdowns.
Consider scaling out partial profits near the support zone before the full target is hit.
🔧 Confluence & Validation
The setup aligns with basic price action principles: lower highs at resistance and exhaustion of bullish momentum.
Volume tends to drop during wedge formation and pick up during breakout – monitor volume for confirmation.
RSI or MACD divergence may further validate the bearish momentum.
🏷️ Conclusion
This rising wedge on XAUUSD presents a textbook short setup with a favorable risk-to-reward ratio. The structure, resistance zone, and loss of momentum indicate a potential shift to the downside. Traders should watch for confirmation before entering and use disciplined stop-loss management.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.