Gold at Inflection Point: Bullish Reversal or Deeper Correction?

XAUUSD is trading at 4,068.5, sitting at a fascinating technical crossroads. After the recent pullback from all-time highs, the yellow metal is testing a critical support confluence that could determine the next major move. Let's examine what the charts are revealing. ✨

The Big Picture

Gold has carved out a Falling Wedge pattern on the 1H timeframe—a classically bullish reversal structure. This compression between converging trendlines (upper resistance at 4,085 and lower support at 4,055) typically resolves with an upside breakout. We're currently bouncing off the lower boundary.

The Dow Theory perspective shows the primary trend remains bullish on higher timeframes (4H/Daily), while the current pullback represents a healthy intermediate correction. The recent low at 4,042 held above the critical swing low at 4,020, maintaining the sequence of higher lows.

Wyckoff Re-accumulation Phase 📊

The overnight price action displays textbook Wyckoff re-accumulation behavior within a trading range:

• Preliminary Support (PS) established at 4,042
  
• Selling Climax (SC) absorbed with declining volume
  
• Automatic Rally (AR) back to 4,075
  
• Secondary Test (ST) currently forming around 4,060-4,065
  

This structure suggests smart money is accumulating positions ahead of the next markup phase.

Elliott Wave Interpretation 🌊

The wave count indicates we're in a corrective ABC pattern within a larger bullish impulse:

• Wave (A): Sharp decline from 4,120 to 4,042
  
• Wave (B): Corrective bounce to 4,085
  
• Wave (C): Final leg down potentially targeting 4,050-4,055 (or already complete)
  

If the ABC correction is complete, we're positioned for wave (iii) of the next impulse targeting 4,150-4,200.

Critical Price Levels 🎯

Resistance Zones:

• R1: 4,090 (wedge upper boundary + 50 EMA on 1H)
  
• R2: 4,120 (previous swing high + psychological)
  
• R3: 4,165 (Fibonacci extension 1.272)
  

Support Zones:

• S1: 4,055 (wedge lower boundary + current pivot)
  
• S2: 4,042 (recent swing low + demand zone)
  
• S3: 4,020 (critical support + 200 EMA on 4H)
  

Indicator Snapshot ⚡

• RSI (1H): 44.8 - bullish divergence forming (price making lower lows, RSI making higher lows)
  
• Stochastic: Oversold at 22, curling upward (bullish reversal signal)
  
• VWAP: Sitting at 4,072, acting as immediate resistance
  
• Ichimoku Cloud: Price testing cloud support on 1H, Tenkan/Kijun preparing for bullish cross
  
• Volume: Declining on pullbacks (healthy correction characteristic)
  

Harmonic Pattern Recognition

A Bullish Gartley pattern has completed with precision:
- X: 4,020
- A: 4,120
- B: 4,065 (0.618 retracement)
- C: 4,095
- D: 4,050 (PRZ zone - Potential Reversal Zone)

The pattern's completion at current levels adds significant confluence to the bullish reversal thesis.

Japanese Candlestick Analysis

The 15M chart printed a Bullish Hammer at 4,055, followed by a Morning Star formation. These reversal patterns at support suggest buyer conviction is building.

Actionable Trade Setups 💰

Strategy 1 - Wedge Breakout Long:

Entry: 4,092 (break above wedge resistance with volume)
Target 1: 4,120
Target 2: 4,165
Stop Loss: 4,050

Strategy 2 - Support Zone Buy:

Entry: 4,055-4,062 (current zone, limit orders)
Target 1: 4,090
Target 2: 4,130
Stop Loss: 4,038

Timeframe Hierarchy 🕐
- 5M: Entry refinement and scalp management
- 15M: Candlestick patterns and momentum confirmation
- 1H: Primary pattern structure and trend direction
- 4H: Macro trend validation and key support/resistance

Market Verdict

Gold is coiled at a pivotal support zone with multiple bullish signals converging. The falling wedge, Wyckoff re-accumulation, completed Gartley pattern, RSI divergence, and reversal candlesticks all point toward an upside resolution. The 4,055 level is your line in the sand—hold above it and we're likely heading to 4,120+.

However, a decisive break below 4,042 would invalidate the bullish setup and open the door to 4,020. Until proven otherwise, the bias favors buyers at current levels. 🚀

Patience and precision win in this game. Wait for your setup, execute with discipline. ⚡

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Risk Warning: Gold trading involves substantial risk. This analysis is educational content only, not financial advice. Always manage your risk appropriately.