Long = For Final test of gold strength before summer sell off

22 Jul 2023

XAUUSD



Using the weekly TF, we can see for several weeks price tested and rejected the resistance area of August 2020's high ($2035.23 - $2075.28), and on May 4th topped out for this years high with the Daily trend hitting resistance from buyers and showing signs of weakness with 2 swing lows. We should bear in mind however, these are also 2 runs on liquidity, taking out stops first around $1957.35 (Weekly close high - 4hr flip) and then at around $1897.69 (Daily swing high close - 4hr flip). Meaning the potential completion of a liquidity purge sequence for a continuation.



Price is currently trending towards $1988.52, the weekly close and last years high of 8th March 2022, which was a retest of 2020's high. We can see on the daily chart above there was some considerable price action also in that area this year March 15th to May 2nd this year, when price clearly uses that $1988 bench mark as a platform to launch a third test of the high area on May 3rd. Looking at the price action for that period on the 4hr TF, we see that 1988.52 as a major swing high resistance in March, then used as a major swing low support area in April, bottoming out around 1969.30 before making a drive for that 3rd test at the begining of May.

That 1988.52 area was then used as a resistance / supply zone from mid may until June 16th when price made its second leg down and liquidation run move on the daily TF.




Price is now back in that 1988.52 - 1969.30 supply zone, testing the lower swing high and start of the 2nd leg. With this said, I make these further observations on the daily TF where the current wave is 1) Moving strongly in the bullish direct with a large rang bearish candle testing the previous swing high, 2) the wave is not yet complete - it will need a clean (non ranging candle) close below $1954.65 to complete. This would create an equal high and likely a need to wait for a bullish reversal pattern on the 4 hour TF.

My final conclusion is with the view that the strong daily momentum, paired with the 4 hr TF having completed a second leg (1 liquidation) but not yet testing the $1988.52 for resistance, leads me to a bearish bias for a 2nd liquidation between $1988.52 - 2009.85.

Entry = $1962 - $1965.80
Target 1 = Around $1995
Target 2 = Around $2002

However, I would wait for price to test the open of the last bullish candle at $1954.98, which also just below the H4 Flip at $1956.49. It is currently in the 2nd liquidation run on the 1 hr TF and this needs to complete with a clean bullish reversal back above $1962 without engulfing the daily bull candle. I'd then set a limit entry for the pullback. My actual entry and targets will depend on the low printed after the reversal.

22 Jul 2023

Catatan

This should say an "overall Bearish Bias".
In the short term, however, is a final long trade leading upto that area based on a strong potential for a 2nd liquidation long side.