XAU/USD: Bullish Reversal Ahead?

XAU/USD is currently trading inside a well-defined descending channel after a prolonged corrective phase. Price has now reached a significant support area that aligns with a bullish Fair Value Gap (FVG), creating a strong confluence zone where institutional buying interest may emerge. The recent move below support appears to be a liquidity sweep rather than a confirmed bearish continuation, suggesting that sell-side liquidity may have been collected before a potential reversal.

The structure shows repeated lower highs while the downside momentum has started to slow near the demand zone. If buyers defend this area and price successfully reclaims the broken support with a strong bullish displacement, it would confirm a shift in short-term market structure. Such a move could trigger an impulsive rally toward the upper boundary of the descending channel.

The first objective is a recovery into the channel resistance, followed by a breakout above the descending trendline. A successful breakout would expose higher liquidity resting above recent swing highs, with the next major target located inside the Major Internal Range Liquidity zone around 4320–4360, where institutional orders are likely concentrated.

However, if price fails to hold the current support and closes decisively below the highlighted demand zone, the bullish scenario becomes invalid and a deeper corrective move may develop before buyers regain control.

Overall, the chart presents an attractive risk-to-reward bullish opportunity, provided confirmation appears through bullish market structure, increased buying momentum, and a sustained hold above the current support/FVG region. Until then, traders should remain patient and wait for confirmation rather than anticipating the breakout prematurely.

Key Levels:

Support: 3973–3995 (Demand + FVG)
Bullish Confirmation: Reclaim of support and break above the descending trendline
Major Bullish Target: 4320–4360 (Major Internal Range Liquidity)
Invalidation: Sustained close below the highlighted support zone