At the time of writing, we believe the yellow metal to be currently underlining overbought conditions. To put it differently, the H4 candles are presently trading within a H4 (see black arrows) sell zone comprised of both the 127.2%/161.8% Fib extensions (yellow area – 1232.9/1241.7). Supporting a downside move from this area is also the fact that the top edge is strengthened by a weekly pegged at 1241.2. With that being the case, there may be trouble ahead for traders who bought into the breakout above daily supply at 1232.9-1224.5!
Our suggestions: For us personally, we have chosen to wait and see if bullion can stretch a little higher into the above noted H4 sell zone, before looking to short. Ideally, the closer the better to the weekly resistance at 1241.2! In addition to this, our trigger to sell will be on the basis that a reasonably sized H4 bear candle forms. Granted, this will by no means guarantee a winning trade, but what it will do is show seller intent within a high-probability reversal zone.