📌 Overview of the Chart:
This 4-hour timeframe chart of Gold Spot (XAU/USD) highlights a Double Top pattern, one of the most reliable bearish reversal signals in technical analysis. The price has tested a strong resistance zone twice (Top 1 & Top 2) but failed to break above, suggesting that bullish momentum is weakening and a possible trend reversal is imminent.
This setup provides an excellent opportunity for a short (sell) trade, provided the price confirms the pattern by breaking below the neckline. The potential downside targets are marked as TP1 ($2,983) and TP2 ($2,938), with a stop loss placed above resistance ($3,056) to manage risk effectively.
📌 Key Chart Patterns & Market Dynamics
1️⃣ Double Top Pattern – The Bearish Reversal Signal
The Double Top pattern occurs when:
✅ The price reaches a resistance zone and gets rejected (Top 1).
✅ It then retraces downward to find support at the neckline.
✅ The price makes another attempt to push higher but fails at the same resistance level (Top 2).
✅ A break below the neckline confirms the bearish trend, as buyers lose strength and sellers take control.
🛑 Why is this pattern important?
The failure of buyers to push beyond resistance shows that sellers are dominating. This creates a psychological shift in the market, making traders and institutions more likely to sell aggressively once the neckline is broken.
2️⃣ Resistance Level – The Rejection Zone
🔵 Price Level: $3,050 – $3,056
🔵 Role: Key supply area where sellers are strong
🔵 Market Impact: Strong rejections at this level indicate that big players (institutions) are offloading positions, leading to bearish momentum.
Why Does This Matter?
📌 If the price breaks above this level, it would invalidate the bearish setup, leading to potential further upside.
📌 This is also why we place our Stop Loss above this level—to protect against unexpected bullish breakouts.
3️⃣ Neckline Support – The Breakout Zone
🔻 Price Level: Around $3,020
🔻 Role: The last line of defense for buyers before a bearish breakout
🔻 Market Impact: If this level is breached, it confirms the Double Top pattern, leading to a sharp decline.
📌 A confirmed break of the neckline is the ideal point for traders to enter a short (sell) position, targeting lower price levels.
4️⃣ Key Take Profit (TP) Targets – Where Price Might Drop
🎯 TP1 – $2,983:
This level is a minor support zone where price may temporarily pause before further decline.
Conservative traders may choose to secure profits here.
🎯 TP2 – $2,938:
A stronger historical support zone, making it a high-probability target for a full bearish move.
More aggressive traders may hold positions until this level.
📌 Why These Levels?
These targets align with Fibonacci retracement zones and previous market structure, increasing the likelihood of a reaction at these points.
5️⃣ Stop Loss – Managing Risk Like a Pro
Placement: Above the resistance zone at $3,056
Reason: If price breaks above resistance, it invalidates the bearish thesis, meaning we need to exit the trade.
Risk-Reward Ratio:
TP1: ~2:1
TP2: ~3.5:1
A good risk-reward setup, ensuring a profitable edge over multiple trades.
📌 Trading Strategy & Execution Plan
📉 Bearish (Sell) Setup:
1️⃣ Wait for confirmation – Price must break below the neckline ($3,020) before entering a short trade.
2️⃣ Sell Entry: On a confirmed break and retest of the neckline.
3️⃣ Stop Loss: Above the resistance zone ($3,056).
4️⃣ Take Profit Targets:
TP1 ($2,983) – First profit level.
TP2 ($2,938) – Secondary target for deeper decline.
📌 Optional Confirmation:
Look for bearish candlestick formations (e.g., Bearish Engulfing, Shooting Star, or Doji) near resistance or after a neckline breakout.
Monitor RSI/MACD for bearish divergence, confirming weakening momentum.
📌 Market Psychology Behind This Pattern
1️⃣ First Peak (Top 1): Buyers push the price up, but sellers step in at resistance and force a pullback.
2️⃣ Pullback to Neckline: Some buyers re-enter, believing the uptrend will continue.
3️⃣ Second Peak (Top 2): Price attempts another rally but fails at the same resistance, showing buyers' exhaustion.
4️⃣ Break of the Neckline: Sellers take full control, leading to a high-momentum sell-off.
📌 Key Takeaway:
💡 The Double Top is a trader’s favorite because it reflects a real psychological shift in market sentiment—from greed (buyers) to fear (sellers).
📌 Final Verdict – High Probability Trade Setup
✅ Double Top formation confirms a bearish trend reversal.
✅ Strong resistance & multiple rejections signal seller dominance.
✅ Clear risk management strategy (Stop Loss & TP Levels).
✅ Waiting for neckline break ensures a high-probability entry.
🚀 Watch this setup carefully! If the neckline breaks, GOLD could experience a sharp decline! 📉🔥
🔍 Pro Tips for Smart Traders
💡 Don’t rush into a trade! Wait for a solid break and retest of the neckline for confirmation.
💡 Monitor volume: A strong breakout should be accompanied by increasing volume for validation.
💡 Use confluence: Combine with other indicators (RSI, MACD, EMA) to increase accuracy.
🔥 What’s Your Take on This Setup? Will You Trade It? Let Me Know in the Comments! 🚀
This 4-hour timeframe chart of Gold Spot (XAU/USD) highlights a Double Top pattern, one of the most reliable bearish reversal signals in technical analysis. The price has tested a strong resistance zone twice (Top 1 & Top 2) but failed to break above, suggesting that bullish momentum is weakening and a possible trend reversal is imminent.
This setup provides an excellent opportunity for a short (sell) trade, provided the price confirms the pattern by breaking below the neckline. The potential downside targets are marked as TP1 ($2,983) and TP2 ($2,938), with a stop loss placed above resistance ($3,056) to manage risk effectively.
📌 Key Chart Patterns & Market Dynamics
1️⃣ Double Top Pattern – The Bearish Reversal Signal
The Double Top pattern occurs when:
✅ The price reaches a resistance zone and gets rejected (Top 1).
✅ It then retraces downward to find support at the neckline.
✅ The price makes another attempt to push higher but fails at the same resistance level (Top 2).
✅ A break below the neckline confirms the bearish trend, as buyers lose strength and sellers take control.
🛑 Why is this pattern important?
The failure of buyers to push beyond resistance shows that sellers are dominating. This creates a psychological shift in the market, making traders and institutions more likely to sell aggressively once the neckline is broken.
2️⃣ Resistance Level – The Rejection Zone
🔵 Price Level: $3,050 – $3,056
🔵 Role: Key supply area where sellers are strong
🔵 Market Impact: Strong rejections at this level indicate that big players (institutions) are offloading positions, leading to bearish momentum.
Why Does This Matter?
📌 If the price breaks above this level, it would invalidate the bearish setup, leading to potential further upside.
📌 This is also why we place our Stop Loss above this level—to protect against unexpected bullish breakouts.
3️⃣ Neckline Support – The Breakout Zone
🔻 Price Level: Around $3,020
🔻 Role: The last line of defense for buyers before a bearish breakout
🔻 Market Impact: If this level is breached, it confirms the Double Top pattern, leading to a sharp decline.
📌 A confirmed break of the neckline is the ideal point for traders to enter a short (sell) position, targeting lower price levels.
4️⃣ Key Take Profit (TP) Targets – Where Price Might Drop
🎯 TP1 – $2,983:
This level is a minor support zone where price may temporarily pause before further decline.
Conservative traders may choose to secure profits here.
🎯 TP2 – $2,938:
A stronger historical support zone, making it a high-probability target for a full bearish move.
More aggressive traders may hold positions until this level.
📌 Why These Levels?
These targets align with Fibonacci retracement zones and previous market structure, increasing the likelihood of a reaction at these points.
5️⃣ Stop Loss – Managing Risk Like a Pro
Placement: Above the resistance zone at $3,056
Reason: If price breaks above resistance, it invalidates the bearish thesis, meaning we need to exit the trade.
Risk-Reward Ratio:
TP1: ~2:1
TP2: ~3.5:1
A good risk-reward setup, ensuring a profitable edge over multiple trades.
📌 Trading Strategy & Execution Plan
📉 Bearish (Sell) Setup:
1️⃣ Wait for confirmation – Price must break below the neckline ($3,020) before entering a short trade.
2️⃣ Sell Entry: On a confirmed break and retest of the neckline.
3️⃣ Stop Loss: Above the resistance zone ($3,056).
4️⃣ Take Profit Targets:
TP1 ($2,983) – First profit level.
TP2 ($2,938) – Secondary target for deeper decline.
📌 Optional Confirmation:
Look for bearish candlestick formations (e.g., Bearish Engulfing, Shooting Star, or Doji) near resistance or after a neckline breakout.
Monitor RSI/MACD for bearish divergence, confirming weakening momentum.
📌 Market Psychology Behind This Pattern
1️⃣ First Peak (Top 1): Buyers push the price up, but sellers step in at resistance and force a pullback.
2️⃣ Pullback to Neckline: Some buyers re-enter, believing the uptrend will continue.
3️⃣ Second Peak (Top 2): Price attempts another rally but fails at the same resistance, showing buyers' exhaustion.
4️⃣ Break of the Neckline: Sellers take full control, leading to a high-momentum sell-off.
📌 Key Takeaway:
💡 The Double Top is a trader’s favorite because it reflects a real psychological shift in market sentiment—from greed (buyers) to fear (sellers).
📌 Final Verdict – High Probability Trade Setup
✅ Double Top formation confirms a bearish trend reversal.
✅ Strong resistance & multiple rejections signal seller dominance.
✅ Clear risk management strategy (Stop Loss & TP Levels).
✅ Waiting for neckline break ensures a high-probability entry.
🚀 Watch this setup carefully! If the neckline breaks, GOLD could experience a sharp decline! 📉🔥
🔍 Pro Tips for Smart Traders
💡 Don’t rush into a trade! Wait for a solid break and retest of the neckline for confirmation.
💡 Monitor volume: A strong breakout should be accompanied by increasing volume for validation.
💡 Use confluence: Combine with other indicators (RSI, MACD, EMA) to increase accuracy.
🔥 What’s Your Take on This Setup? Will You Trade It? Let Me Know in the Comments! 🚀
💰FREE GOLD signals in Telegram:
t.me/goldmastertradezone
💰FREE GOLD Scalping signals Daily 5-6 Trades in Telegram: t.me/goldmastertradezone
t.me/goldmastertradezone
💰FREE GOLD Scalping signals Daily 5-6 Trades in Telegram: t.me/goldmastertradezone
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.
💰FREE GOLD signals in Telegram:
t.me/goldmastertradezone
💰FREE GOLD Scalping signals Daily 5-6 Trades in Telegram: t.me/goldmastertradezone
t.me/goldmastertradezone
💰FREE GOLD Scalping signals Daily 5-6 Trades in Telegram: t.me/goldmastertradezone
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.