Technical Outlook on XAU/USD: Rising Wedge and Ascending Channel
1. Daily Chart (D1)
Pattern Observed: There is a noticeable ascending channel forming. The upper boundary is marked by a series of higher highs (HH), and the lower boundary is marked by higher lows (HL).
Resistance Zone: The chart indicates a key resistance around the 2,540–2,560 level, highlighted by the upper trendline of the ascending channel.
Support Levels: Key support zones are marked around 2,267 (Weekly LQZ) and 2,353 (4HR LQZ), which coincide with significant price action in the past, potentially serving as strong support areas in case of a pullback.
Market Behavior: The market is currently testing the upper trendline resistance of the ascending channel. A rejection from this level could indicate a potential reversal or a pullback to the lower boundary of the channel.
2. 4-Hour Chart (H4)
Pattern Observed: The 4-hour chart also shows a more defined rising wedge pattern, which is typically a bearish reversal pattern when it forms in an uptrend. The price is trading near the upper resistance line of this wedge.
Liquidity Zone: An important liquidity grab/rejection area is marked around 2,476, which aligns with previous price consolidations and rejections. This area could serve as a strong inflection point where price could either rebound or break below, leading to a deeper correction.
Highs and Lows: A series of higher highs (HH) are visible, but the formation of a recent lower high (LH) could signal the start of a potential reversal if the price fails to create a new higher high above the previous peaks.
3. 1-Hour Chart (H1)
Pattern Observed: The 1-hour chart presents a more detailed look into the price action within the wedge. The price action is currently within a tightening range, reflecting indecision and possible consolidation before a breakout.
Support and Resistance: Near-term support is identified at the liquidity zone around 2,476, and the resistance aligns with the upper boundary of the wedge pattern.
Potential Setup: A bearish divergence could be developing, given the price action nearing resistance while momentum indicators (not shown here) might start to flatten or decline.
4. Multi-Time Frame Analysis
Higher Time Frame Influence: The weekly flag pattern identified on the daily chart is influencing the overall bullish bias. However, the rising wedge pattern on both the daily and 4-hour charts suggests caution as a potential bearish reversal could occur.
Key Decision Zones: If the price breaks above the upper boundary of the wedge, it would likely aim for the next resistance levels around 2,560 and possibly beyond, towards 2,600+. Conversely, a breakdown below the wedge's lower boundary could accelerate selling towards the 2,353 and 2,267 levels, where major liquidity zones reside.
5. Trading Strategy Insights
For Long Positions: Consider entries upon a confirmed breakout above the upper boundary of the ascending channel/wedge, targeting the next significant resistance levels. Utilize tight stop losses to minimize risk in case of a false breakout.
For Short Positions: Look for bearish confirmation such as rejection from the upper boundary or a breakdown below the support trendline. Potential targets would be the 4HR LQZ and the Weekly LQZ, with stops above recent highs to protect against unexpected volatility.
Conclusion:
The current price action suggests a critical juncture where the Gold Spot (XAU/USD) is at a significant resistance area. Traders should watch for a breakout or breakdown from the wedge pattern on the 4-hour and daily charts to determine the next directional move. Keep an eye on volume and momentum indicators for confirmation, as well as news events that could influence gold prices.
Pattern Observed: There is a noticeable ascending channel forming. The upper boundary is marked by a series of higher highs (HH), and the lower boundary is marked by higher lows (HL).
Resistance Zone: The chart indicates a key resistance around the 2,540–2,560 level, highlighted by the upper trendline of the ascending channel.
Support Levels: Key support zones are marked around 2,267 (Weekly LQZ) and 2,353 (4HR LQZ), which coincide with significant price action in the past, potentially serving as strong support areas in case of a pullback.
Market Behavior: The market is currently testing the upper trendline resistance of the ascending channel. A rejection from this level could indicate a potential reversal or a pullback to the lower boundary of the channel.
2. 4-Hour Chart (H4)
Pattern Observed: The 4-hour chart also shows a more defined rising wedge pattern, which is typically a bearish reversal pattern when it forms in an uptrend. The price is trading near the upper resistance line of this wedge.
Liquidity Zone: An important liquidity grab/rejection area is marked around 2,476, which aligns with previous price consolidations and rejections. This area could serve as a strong inflection point where price could either rebound or break below, leading to a deeper correction.
Highs and Lows: A series of higher highs (HH) are visible, but the formation of a recent lower high (LH) could signal the start of a potential reversal if the price fails to create a new higher high above the previous peaks.
3. 1-Hour Chart (H1)
Pattern Observed: The 1-hour chart presents a more detailed look into the price action within the wedge. The price action is currently within a tightening range, reflecting indecision and possible consolidation before a breakout.
Support and Resistance: Near-term support is identified at the liquidity zone around 2,476, and the resistance aligns with the upper boundary of the wedge pattern.
Potential Setup: A bearish divergence could be developing, given the price action nearing resistance while momentum indicators (not shown here) might start to flatten or decline.
4. Multi-Time Frame Analysis
Higher Time Frame Influence: The weekly flag pattern identified on the daily chart is influencing the overall bullish bias. However, the rising wedge pattern on both the daily and 4-hour charts suggests caution as a potential bearish reversal could occur.
Key Decision Zones: If the price breaks above the upper boundary of the wedge, it would likely aim for the next resistance levels around 2,560 and possibly beyond, towards 2,600+. Conversely, a breakdown below the wedge's lower boundary could accelerate selling towards the 2,353 and 2,267 levels, where major liquidity zones reside.
5. Trading Strategy Insights
For Long Positions: Consider entries upon a confirmed breakout above the upper boundary of the ascending channel/wedge, targeting the next significant resistance levels. Utilize tight stop losses to minimize risk in case of a false breakout.
For Short Positions: Look for bearish confirmation such as rejection from the upper boundary or a breakdown below the support trendline. Potential targets would be the 4HR LQZ and the Weekly LQZ, with stops above recent highs to protect against unexpected volatility.
Conclusion:
The current price action suggests a critical juncture where the Gold Spot (XAU/USD) is at a significant resistance area. Traders should watch for a breakout or breakdown from the wedge pattern on the 4-hour and daily charts to determine the next directional move. Keep an eye on volume and momentum indicators for confirmation, as well as news events that could influence gold prices.
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Improve your overall trading confidence and performance
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