XAUUSD - Prospects for upcoming last week of Sep' 2022
Dear traders, as I have already told you in my previous major trend analysis idea (see related ideas) that we have just come across a major reversal on the XAUUSD, our favorite metal. Breaking lower from a 122 weeks Darvas box and 115 major support region between 1680-95, we are not looking for long entries.
Although the break and retest of the 1680-95 region took an entire week giving out an expanding triangle continuation pattern, considering the spikes produced during FOMC and the major interventions during the monetary policies of Bank of Japan and Swiss National Bank. Lucky for us, that on last Friday, the price finally broke lower than the consolidation region and now we are looking for lower technical targets. Now that the picture is relatively clearer on a more local level in accordance to the major trend, let us analyze the evidence of the expected targets:
1- First of all the trend is super bearish considering we broke lower than 2+ year well-defended support (1680-95) and the major 122 weeks Darvas box on the same level. Therefore, this support region shall now be treated as a resistance region and we do not expect it to break higher anytime soon.
2- We have a clear breakout from the expanding triangle price consolidation region.
3- The first move before we entered this consolidation region and before breaking lower than 1680, was from 1731-1654 which accounts for the A-B move from AB=CD pattern (drawn on the chart). We now have recognized the last top of the spike-up inside the expanding triangle at 1684.86 (~1685) as our point C. Now if we consider that same length of the leg is to be produced between C and finally D point as between A and B, we see our target extending to 1608.
4- Fibonacci extension drawn from the first move AB has a strong extended target at 1606 at 1.618 Fibo ratio, which is also close to our AB=CD pattern lower target.
5- Our next major target zone based on historic support levels after breakout from 1680 level, as elaborated from the previous major trend analysis about XAUUSD (see related idea), is starting from 1591 or for simplicity you can say below 1600 price level.
6- Considering all of this, I am compelled to consider that our next small frame (H4) price consolidation (if any) is likely to commence between 1591-1610, breaking out from which, we can sell again to lower levels than the most recent. (But that is in the future, we will consider this point if we reach that price range and see any price consolidation around that level for now just consider the bearish prospect price target region in 161x.)
7- FEDs have just recently increased interest rates by 75 bps to 3.25% and have also announced a further hike to a level of 5%, the market still has to adjust to that level.
8- The break and retest of this 1680-95 zone has concluded during the last week.
Note:
This analysis is invalid if we break higher than 1680-95 region out of some miracle and resultantly break 1711-16 bullish reversal zone (represented by upper border of the major bearish channel from my previous ideas).
Suggestions to traders who are going to trade this idea:
1- First of all the stop loss from this current scenario is 1696 and if you have a lot of patience to trade and you want to consider the worst possible situation, it is 1713 (although unlikely). However, 1685 is just fine! I always consider stop losses at a point where my analysis becomes invalid. Therefore, take extra care of your capital and choose lot sizes accordingly. A better idea is to choose a small yet reasonable lot size and cumulative to your maximum affordable lot considering the averaging or pyramiding method.
2- Your weekly expected target lies between 1591-1600 before a possible future correction and consolidation might occur around it, so be patient since you may not see your take profit on the same day as you enter.
Although the break and retest of the 1680-95 region took an entire week giving out an expanding triangle continuation pattern, considering the spikes produced during FOMC and the major interventions during the monetary policies of Bank of Japan and Swiss National Bank. Lucky for us, that on last Friday, the price finally broke lower than the consolidation region and now we are looking for lower technical targets. Now that the picture is relatively clearer on a more local level in accordance to the major trend, let us analyze the evidence of the expected targets:
1- First of all the trend is super bearish considering we broke lower than 2+ year well-defended support (1680-95) and the major 122 weeks Darvas box on the same level. Therefore, this support region shall now be treated as a resistance region and we do not expect it to break higher anytime soon.
2- We have a clear breakout from the expanding triangle price consolidation region.
3- The first move before we entered this consolidation region and before breaking lower than 1680, was from 1731-1654 which accounts for the A-B move from AB=CD pattern (drawn on the chart). We now have recognized the last top of the spike-up inside the expanding triangle at 1684.86 (~1685) as our point C. Now if we consider that same length of the leg is to be produced between C and finally D point as between A and B, we see our target extending to 1608.
4- Fibonacci extension drawn from the first move AB has a strong extended target at 1606 at 1.618 Fibo ratio, which is also close to our AB=CD pattern lower target.
5- Our next major target zone based on historic support levels after breakout from 1680 level, as elaborated from the previous major trend analysis about XAUUSD (see related idea), is starting from 1591 or for simplicity you can say below 1600 price level.
6- Considering all of this, I am compelled to consider that our next small frame (H4) price consolidation (if any) is likely to commence between 1591-1610, breaking out from which, we can sell again to lower levels than the most recent. (But that is in the future, we will consider this point if we reach that price range and see any price consolidation around that level for now just consider the bearish prospect price target region in 161x.)
7- FEDs have just recently increased interest rates by 75 bps to 3.25% and have also announced a further hike to a level of 5%, the market still has to adjust to that level.
8- The break and retest of this 1680-95 zone has concluded during the last week.
Note:
This analysis is invalid if we break higher than 1680-95 region out of some miracle and resultantly break 1711-16 bullish reversal zone (represented by upper border of the major bearish channel from my previous ideas).
Suggestions to traders who are going to trade this idea:
1- First of all the stop loss from this current scenario is 1696 and if you have a lot of patience to trade and you want to consider the worst possible situation, it is 1713 (although unlikely). However, 1685 is just fine! I always consider stop losses at a point where my analysis becomes invalid. Therefore, take extra care of your capital and choose lot sizes accordingly. A better idea is to choose a small yet reasonable lot size and cumulative to your maximum affordable lot considering the averaging or pyramiding method.
2- Your weekly expected target lies between 1591-1600 before a possible future correction and consolidation might occur around it, so be patient since you may not see your take profit on the same day as you enter.
