XAUUSD
🚨 GOLD’S WEDNESDAY SETUP: ONE MORE RALLY BEFORE THE NEXT SELLOFF?
Gold delivered some strong upside momentum on Tuesday, but the interesting part is how the market executed this move.
Initially, the expectation was for Gold to sweep Monday’s low around $4110 before starting its recovery. However, the market decided to move higher without taking out that liquidity, creating a completely different situation.
Tuesday’s selling pressure could potentially have been used as liquidity. Monday’s aggressive selloff had already attracted a significant number of sellers at lower levels. At the same time, traders who missed Monday’s move were likely waiting for another opportunity to enter short positions and target further downside.
And that is exactly where things became interesting.
Instead of continuing lower, Gold delivered a strong upside move, potentially trapping a significant number of sellers. Meanwhile, many traders who were aggressively bearish were hesitant to buy near the bottom because their entire focus was on selling.
Now, looking at the strength of Tuesday’s recovery and the bullish momentum developing toward the closing hours, another interesting situation could be forming.
A significant number of traders have already started buying at higher levels, and if Gold maintains this momentum into the close, we could see even more buyers entering the market in anticipation of further upside.
This is exactly why Wednesday could become particularly interesting.
Our preferred scenario is to see Gold extend its recovery slightly during the Asian session, attract additional buyers at higher levels, and then potentially deliver a sharp downside move.
Why are we expecting this?
From our perspective, Tuesday’s recovery looks more like a liquidity-driven move designed to trap aggressive sellers rather than a confirmed return of institutional buying.
The market has already forced many late sellers out of their positions, while the strength of the recovery is now encouraging traders to re-enter on the buying side. This creates another potential pool of liquidity at higher levels.
If Gold fails to sustain these higher prices, those newly established long positions could become vulnerable, potentially creating the conditions for another aggressive selloff.
For Wednesday, we will be closely watching how price behaves during the Asian session. If buyers continue entering at higher levels but the market struggles to maintain its bullish momentum, we will be interested in looking for short opportunities after proper confirmation.
Our initial downside level will be $4140. If sellers regain control and price establishes acceptance below this area, we believe Gold could revisit $4120.
Another important factor is the overall market structure.
Despite Tuesday’s impressive recovery, the broader trend remains bearish. Gold has already broken an important support level earlier this week, and one strong bullish session is not enough for us to assume that the entire bearish structure has reversed.
For a genuine recovery, we want to see buyers demonstrate their strength by maintaining higher prices and establishing proper bullish acceptance. Until that happens, we will continue treating rallies into important resistance areas as potential selling opportunities.
Of course, if buyers establish strong acceptance above the higher levels, we will reassess the bearish scenario rather than blindly shorting the market.
For now, our plan is simple. Let the Asian session develop, observe how price responds at higher levels, and wait for signs of buyer exhaustion before considering any short positions.
Tuesday may have trapped the sellers, but Wednesday could potentially trap the buyers.
What’s your view on Gold for Wednesday? Are you expecting the recovery to continue, or do you think another aggressive selloff is coming?
XAUUSD
🚨 GOLD’S WEDNESDAY SETUP: ONE MORE RALLY BEFORE THE NEXT SELLOFF?
Gold delivered some strong upside momentum on Tuesday, but the interesting part is how the market executed this move.
Initially, the expectation was for Gold to sweep Monday’s low around $4110 before starting its recovery. However, the market decided to move higher without taking out that liquidity, creating a completely different situation.
Tuesday’s selling pressure could potentially have been used as liquidity. Monday’s aggressive selloff had already attracted a significant number of sellers at lower levels. At the same time, traders who missed Monday’s move were likely waiting for another opportunity to enter short positions and target further downside.
And that is exactly where things became interesting.
Instead of continuing lower, Gold delivered a strong upside move, potentially trapping a significant number of sellers. Meanwhile, many traders who were aggressively bearish were hesitant to buy near the bottom because their entire focus was on selling.
Now, looking at the strength of Tuesday’s recovery and the bullish momentum developing toward the closing hours, another interesting situation could be forming.
A significant number of traders have already started buying at higher levels, and if Gold maintains this momentum into the close, we could see even more buyers entering the market in anticipation of further upside.
This is exactly why Wednesday could become particularly interesting.
Our preferred scenario is to see Gold extend its recovery slightly during the Asian session, attract additional buyers at higher levels, and then potentially deliver a sharp downside move.
Why are we expecting this?
From our perspective, Tuesday’s recovery looks more like a liquidity-driven move designed to trap aggressive sellers rather than a confirmed return of institutional buying.
The market has already forced many late sellers out of their positions, while the strength of the recovery is now encouraging traders to re-enter on the buying side. This creates another potential pool of liquidity at higher levels.
If Gold fails to sustain these higher prices, those newly established long positions could become vulnerable, potentially creating the conditions for another aggressive selloff.
For Wednesday, we will be closely watching how price behaves during the Asian session. If buyers continue entering at higher levels but the market struggles to maintain its bullish momentum, we will be interested in looking for short opportunities after proper confirmation.
Our initial downside level will be $4140. If sellers regain control and price establishes acceptance below this area, we believe Gold could revisit $4120.
Another important factor is the overall market structure.
Despite Tuesday’s impressive recovery, the broader trend remains bearish. Gold has already broken an important support level earlier this week, and one strong bullish session is not enough for us to assume that the entire bearish structure has reversed.
For a genuine recovery, we want to see buyers demonstrate their strength by maintaining higher prices and establishing proper bullish acceptance. Until that happens, we will continue treating rallies into important resistance areas as potential selling opportunities.
Of course, if buyers establish strong acceptance above the higher levels, we will reassess the bearish scenario rather than blindly shorting the market.
For now, our plan is simple. Let the Asian session develop, observe how price responds at higher levels, and wait for signs of buyer exhaustion before considering any short positions.
Tuesday may have trapped the sellers, but Wednesday could potentially trap the buyers.
What’s your view on Gold for Wednesday? Are you expecting the recovery to continue, or do you think another aggressive selloff is coming?
