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Gold Flashing Warning SignsGold Flashing Warning Signs: Why We’re Taking a Cautious Short Position Today, our Commitment of Traders (COT) strategy triggered a short trade on gold. Yes, we know—shorting gold at all-time highs feels like swimming upstream. But if you’ve been with us long enough, you know we don’t follow the crowd. We follow the data. And the signals? Well, let’s just say they’re getting hard to ignore. To clarify, this setup wasn’t made on a whim. We got the green light when key technical indicators—Momentum, the Detrended Price Oscillator (DPO), and the Commodity Channel Index (CCI)—all confirmed a bearish divergence on the Daily timeframe. Here’s a closer look at what’s guiding our trade: 1. Commercial Traders Are on High Alert Commercial players—those who deal with gold at its core—are positioned short like we haven’t seen in over three years. They’re the steady hands here, and their caution is hard to overlook. It suggests that even in a market frenzy, they’re seeing potential downsides others may not be watching. 2. Retail Speculators Are Leaning Long While not at full extremes, small speculators are heavily positioned on the long side, nearing a six-month high. This confidence could mean trouble—when retail traders load up, it can mark the late stages of a rally. We’re paying attention to this; it’s a classic contrarian indicator. 3. Open Interest Is Surging—But Why? Open interest in gold futures has been climbing steadily. That’s usually a good thing for bulls, but here’s the twist: large and small speculators have been driving this uptrend. If these buyers lose momentum, who’s left to push prices higher? 4. Sentiment Is Peaking—But Is It Too High? Market sentiment is at a bullish extreme, with advisors optimistic about gold’s rally. High sentiment can be a double-edged sword. It often means there are few people left to buy, and that’s when reversals happen. It’s a classic market psychology moment—and we’re taking note. 5. Gold Is Pricey Relative to Treasuries Using our WillVal indicator, we see that gold is hitting valuation peaks compared to treasuries. This isn’t an automatic sell, but it’s a signal that the precious metal might be pushing its limits. 6. ADX Shows Intense Momentum, But There’s Caution Our ADX indicator is above 40, confirming strong momentum. But we’re cautious here—when the market gets this heated, we often see shifts. Combined with those commercial short positions and high investor sentiment, this momentum could be due for a reality check. 7. Bearish Spread Divergence Is Emerging There’s divergence between the front-month and next-month gold contracts, a sign that underlying strength may be weakening. It’s a small detail, but one that hints the rally might be overextended. 8. Supplementary Indicators Aren't Looking Optimistic Rounding things out, our Insider Acc/Dis, %R, and Stochastic indicators are all showing bearish signals. We don’t rely on these alone, but together, they reinforce the caution signals we’re already seeing. The Bottom Line Shorting gold during a run like this isn’t a decision we take lightly. But the COT data, market positioning, and sentiment suggest a cooling-off period could be near, and the trade was triggered today via the divergence on the daily. Markets have a way of humbling even the most confident predictions, so we approach this trade with an open mind and a healthy dose of caution. If you’re interested in seeing how we analyze trades and approach market extremes, stay tuned.
COMEX:GCZ2024Short
by Tradius_Trades
XAU/USD | Gold has been a good journey, next month however...I will try to keep this one short.. Hi everyone, it has been some time (7 months) since I posted my first idea stating Gold's potential. Gold reached the target 2700$ last week. However, during this week or next week possibly, I am expecting a solid change in direction that will start a short-term consolidation phase. Don't get me wrong, Gold is extremely bullish on the long-term, forming this cup & handle like formation. But throughout the next month, I believe gold will fall around ~2600$, in the worst case around ~2500$. My reasoning is as follows, Looking at the Monthly Chart, Gold's bullish rally carried Gold above the approximately 10-year trend, this is expected to some extent, because Gold has a lot more buying power than it had years before and there is literally a war going on, this too puts pressure on bull side. However, one thing especially caught my attention, RSI is again over 80, which indicates Gold is overbought. In most of the cases where a stock is overbought a consolidation phase is inevitable. Looking at Gold's history, when RSI pushed these levels, in every single case, price dropped. I've added a view that shows the whole history of Gold. And I think this view also suggest sell pressure around the current price. Note that blue marked zone is an approximation because not any information from the past is present. To be able to keep track, I've added this view of the last 4 years. This view also indicates a lot of sell pressure for the short-term. I will update this view from time to time as Gold plays out. Overall, lots of indications, RSI being the most solid one, show that Gold is looking for a consolidation before moving forward with the bull rally. My only concern right now is, Is gold going to push more before consolidation starts? To be honest, It is not easy to comment on that. Least we can do is wait until a solid reversal on a hourly chart. I wouldn’t suggest shorting in situations like this without waiting for confirmation... Please do your own analysis before taking risks, Stay safe...
OANDA:XAUUSDShort
by Kivvwi
GOLD ready to sell possibly? shorts from 2,750This Week's Analysis for Gold: This week, I'm expecting gold to weaken and potentially consolidate. The slight bearish reaction we've observed may indicate that bullish momentum is losing strength. Additionally, with the recent Change of Character (CHOCH) to the downside, an unmitigated 7-hour supply zone has been created, which could prompt a revisit from price. From that level, I anticipate a potential selling opportunity. Once price taps into this zone, I'll be looking for distribution on the lower timeframe to refine my entry. Confluences for Gold Sells: DXY has shown strong bullish movement, and I expect the dollar to keep strengthening. Gold has shifted to a bearish character, signalling weakness. A clean, unmitigated supply zone is in place, where price may retrace. Significant liquidity to the downside and an imbalance that needs filling. Gold has been heavily bullish and may require a corrective move. P.S. If this turns out to be a retracement and price continues upward, I’ll look for potential buys at the 2,680 level. Have a great trading week!
OANDA:XAUUSDShort
by Hassan_fx
Xauusd sell signal Gold price (XAU/USD) builds on its steady intraday ascent and climbs to the $2,736-$2,737 area heading into the European session, reversing a part of the previous day's retracement slide from the record high. From a technical perspective, the overnight breakdown below a short-term ascending trend-channel support could be seen as a fresh trigger for bearish traders. Moreover, negative oscillators on hourly charts suggest that the path of least resistance for the Gold price is to the downside. That said, it will still be prudent to wait for a convincing break below the $2,700 mark before positioning for any further losses. The XAU/USD might then accelerate the corrective decline towards the $2,685 intermediate support en route to the $2,672-2,670 strong horizontal resistance breakpoint. Gold now sell 2739 Support 2725 Support 2712
OANDA:XAUUSDShort
by JohnHarry_7
3
Xauusd sell signal On the flip side, any subsequent slide is likely to find decent support near the $2,725 area, representing the lower end of the aforementioned trend channel. A convincing break below the latter might prompt some technical selling and drag the Gold price to the $2,700 mark en route to the $2,680-2,675 support. The latter is near the 100-period Simple Moving Average (SMA) on the 4-hour charts and should act as a strong base. Gold price attracts some dip-buying on Wednesday and hits a fresh record peak in the last hour. Middle East tensions, US political uncertainty and easing monetary policy regime lend support. Gold now sell 2754 Support 2737 Support 2729
OANDA:XAUUSDShort
by JohnHarry_7
2
Potential Correction in XAU/USD After Recent Bull RunThe price of XAU/USD has experienced a significant upward rally from $2,605 on October 10, 2024, to $2,741 as of October 21, 2024. This impressive bull run has been largely driven by market euphoria surrounding expectations of interest rate cuts. Investors have flocked to safe-haven assets like gold in anticipation of a looser monetary policy, boosting its appeal and driving prices higher. However, despite the ongoing bullish sentiment, there are signs that a potential correction may be on the horizon. When analyzing the recent movement using the Fibonacci retracement tool, the golden ratio (61.8%) suggests a key level of potential support around $2,695. This level could act as a corrective target for profit-taking or a temporary pullback before the next leg higher. A retreat to $2,695 would align with the natural ebb and flow of price action after an extended bullish phase, providing an opportunity for the market to consolidate gains before resuming its upward trend. In the 15-minute chart, XAU/USD is currently forming a bearish rising wedge pattern, a technical signal often associated with potential downward movement. This formation indicates that the recent bullish momentum may be losing steam, suggesting a reversal could be imminent. The narrowing price range within the wedge hints at weakening buying pressure, setting the stage for a possible breakdown. Given the recent extended rally, traders may begin to take profits in the near term, especially as the upward momentum in XAU/USD shows signs of exhaustion. This could lead to increased selling pressure, amplifying the likelihood of a short-term correction. If the price breaks below the lower boundary of the wedge, it would confirm the bearish signal, increasing the chances of a move towards key support levels, such as the previously mentioned $2,695 level. Traders looking to capitalize on this setup should closely monitor the price action for a clear breakdown, as it could offer strategic entry points for short positions or profit-taking opportunities for long traders. Traders and investors should keep a close eye on this level, as a confirmed correction could present buying opportunities for those seeking to enter the market at a lower price. Conversely, if the price holds above key support levels, the bull run could continue, especially if macroeconomic factors such as additional rate cuts or geopolitical tensions further fuel gold's allure. In conclusion, while the recent rally has been impressive, prudence suggests being prepared for a potential correction, especially with $2,695 emerging as a key technical level to watch.
OANDA:XAUUSDShort
by fardycurry