This week's perspective on gold is quite interesting, considering the recent break to the downside. The current retracement, triggered by a reaction from an imbalance, has my attention focused on the 22-hour supply zone. This particular zone played a significant role in causing the downward break.
Given that price has cleared liquidity from its all-time highs, there's potential for a continued downtrend. Therefore, I'm patiently waiting for a Wyckoff distribution to unfold within the 22-hour supply zone. The goal is to capture selling opportunities, anticipating a move back down towards a robust daily demand zone where I expect a bullish reaction to occur.
Confluences for gold Sells are as follows:
- Price has recently broken structure to the downside on the higher time frame.
- ATHs of the chart got swept, enough liquidity to generate a bearish trend.
- Theres still imbalances below to fill as well as a daily demand that needs mitigating.
- Price formed a clean 22hr supply zone that has caused this BOS to happen and in the 0.78 fib range.
- Even if price wants to maintain a bullish trend it must come down to mitigate a demand.
- Sentiment analysis also suggests gold to be bearish.
P.S. While I'm currently bearish, there's a possibility that this could unfold as a temporary move toward a more favourable demand zone. This scenario might set the stage for a continuation of the bullish trend on the higher time frame. However, my immediate focus is on seeking selling opportunities to drive the price back down.
Have a great trading week ahead and let's catch some pips!