Gold (XAU/USD)– Bearish Setup Against the Main Trend (High Risk)
hello guys.
In this 4-hour chart, we can see a Head and Shoulders pattern forming, which is typically a bearish reversal signal. The price has broken below the neckline of the pattern, suggesting a potential downside move. Additionally, the price is currently trading inside a descending channel, reinforcing the bearish momentum.
Bearish Scenario
A potential pullback to the upper boundary of the descending channel (around $3,030-$3,035) could serve as a selling opportunity.
The first target for the decline is around $3,000, a psychological level and previous support.
If momentum continues downward, the price could drop further to $2,962-$2,965, which aligns with strong historical support.
in higher timeframe:
The volume has noticeably declined towards the end of this uptrend, signaling a potential loss of bullish momentum. As prices reach new highs, the decreasing volume suggests that buyers are becoming exhausted, which often precedes a correction or reversal. This divergence between price action and volume indicates that the recent upward movement may not be sustainable, increasing the likelihood of a pullback in the near term.
Why This Trade is Super Risky?
📌 Conclusion:
This setup offers a potential short trade, but high caution is needed due to the bullish macro trend. Entering with low risk and tight stops is essential to manage exposure. If the price breaks above the descending channel, the bearish idea is invalidated.
In this 4-hour chart, we can see a Head and Shoulders pattern forming, which is typically a bearish reversal signal. The price has broken below the neckline of the pattern, suggesting a potential downside move. Additionally, the price is currently trading inside a descending channel, reinforcing the bearish momentum.
Bearish Scenario
A potential pullback to the upper boundary of the descending channel (around $3,030-$3,035) could serve as a selling opportunity.
The first target for the decline is around $3,000, a psychological level and previous support.
If momentum continues downward, the price could drop further to $2,962-$2,965, which aligns with strong historical support.
in higher timeframe:
The volume has noticeably declined towards the end of this uptrend, signaling a potential loss of bullish momentum. As prices reach new highs, the decreasing volume suggests that buyers are becoming exhausted, which often precedes a correction or reversal. This divergence between price action and volume indicates that the recent upward movement may not be sustainable, increasing the likelihood of a pullback in the near term.
Why This Trade is Super Risky?
- Main Trend is Bullish – The overall market structure remains in an uptrend, so this short setup is against the major trend.
- Liquidity & Buyer Pressure – The price could find strong buying pressure around $3,000, leading to a false breakdown.
- Risk Management is Crucial – If entering a short position, risk should be minimal, with a tight stop-loss above $3,035-$3,040 to prevent excessive losses in case of invalidation.
📌 Conclusion:
This setup offers a potential short trade, but high caution is needed due to the bullish macro trend. Entering with low risk and tight stops is essential to manage exposure. If the price breaks above the descending channel, the bearish idea is invalidated.
Trade closed: target reached
reaction to the top line of the channel was good and almost the pointed area touched but it was not good enough to touch the lower levels
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👉 My recommended broker: bit.ly/HYMCMELI
____
Telegram: t.me/melikatrader94
Forex: t.me/melikatrader94GoldForex
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
👉 My recommended exchange(you can get up to $5050 bonuses): lbank.one/join/uF7u10M
____
👉 My recommended broker: bit.ly/HYMCMELI
____
Telegram: t.me/melikatrader94
Forex: t.me/melikatrader94GoldForex
____
👉 My recommended broker: bit.ly/HYMCMELI
____
Telegram: t.me/melikatrader94
Forex: t.me/melikatrader94GoldForex
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.