Gold Anticipates a Short-term Bearish Trend

Market Analysis – October 4

The Gold market recently broke out of a prolonged period of ranging price action that lasted from early April 2024 to mid-July 2024. This breakout marked a significant shift in market direction as the price moved decisively into a bullish trend. The momentum began once the 2453.00 resistance level was breached, signaling a substantial upward movement. The breakout was further confirmed by the daily Moving Average, which reflected a bullish signal as the price stayed above the indicator.

Gold Key Levels

Demand Levels: 2453.00, 2289.0
Supply Levels: 2558.50, 2700.00

Gold Long-Term Trend: Bullish

Following the breakout, the bullish trend gained strength, surpassing subsequent resistance levels, especially at 2558.50. The continued rally saw the price targeting the next major resistance at the 2700.00 level. However, as the XAU/USD market approached this critical resistance, it began to show signs of a slight consolidation phase, suggesting a pause in the bullish momentum. This consolidation is occurring near a key trendline resistance, raising the possibility of a short-term bearish pullback.

The trendline resistance is a crucial point for traders, indicating that the bullish trend might face temporary exhaustion. While the long-term trend remains bullish, the current consolidation phase suggests a potential near-term correction or pullback before the bullish trend resumes.

Gold Short-Term Trend: Bearish

On the 4-hour chart, the recent pause in upward momentum becomes clearer. After reaching the trendline resistance, the price action formed a symmetrical triangle pattern, a common indicator suggesting a potential breakout in either direction. In this case, XAU/USD price broke below the lower boundary of the triangle, indicating that a bearish breakout may be developing. While this bearish momentum unfolds, it is important to note that it is expected to be a corrective pullback within the broader bullish context. Traders using forex signals should remain cautious as they navigate this potential short-term decline.

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