Gold: A False Breakout Pattern Is Forming

The buyer needs to absorb the attack candle at 4023 to confirm a reversal and open the path toward 4154–4185.

This analysis is based on the Initiative Analysis (IA) concept.

On the 1-hour timeframe, the market is in a sideways range.
Sellers attacked the lower boundary of the range — the 4004 level — with increased volume.
This is the candle with the highest volume inside the seller’s initiative (IC on the chart).

Looking at the daily timeframe, we can see that most of the volume was accumulated below 4004, which looks very much like a false breakout.

A false breakout pattern on the hourly chart will be considered confirmed once the buyer absorbs the seller’s attack candle, meaning the buyer’s candle closes above the high at 4023.

If the buyer manages to absorb the attack candle at the lower boundary of the range,
the next steps to watch are:

• whether the price can pass 4050 and the 50% level of the trading range at 4066; be especially cautious around this area, since 4059 is also a daily level where the buyer might face resistance and trigger a short reaction.
  
• and whether the movement stalls near the high of yesterday’s daily candle at 4109.
  

If these levels are successfully passed, the buyer targets are located at 4154 and 4185.

Wishing you profitable trades!