🔍 Overview:
The 1-hour chart of Gold (XAU/USD) reveals a textbook Double Top formation, signaling a potential trend reversal after a strong bullish rally. The price action has moved from a rounded accumulation base (curve area) into a critical resistance zone, where signs of exhaustion are now emerging.
This setup offers a clear bearish opportunity if price breaks below the neckline, with a well-defined target and stop-loss level. Let’s dive into the detailed breakdown.
🔄 Phase 1: The Bullish Rally from the Curve Area
The market initiated a strong bullish move from the support level around 3,000–3,020, forming a rounded bottom. This curve pattern is a classic accumulation structure, indicating that buyers were gradually stepping in to absorb supply.
Key observations:
Multiple attempts to break the support failed.
Smooth curve formation suggests smart money accumulation.
Once price broke above minor resistance, momentum accelerated.
This move led the price straight into a critical resistance zone, which has historically acted as a supply area.
🟥 Phase 2: Inner Resistance Zone & Rejection
Price tapped into the Inner Resistance Zone (highlighted in purple), a key area that aligns with previous swing highs. This zone acts as a decision point — either bulls break out or bears take control.
Price made two strong attempts to break through this zone:
Top 1 formed as the initial reaction.
After a slight pullback, price re-tested the same level and failed again (Top 2).
This failure to make a new high is the first signal of bullish weakness and sets the stage for a Double Top reversal.
🧱 Phase 3: Double Top Pattern Identified
A Double Top is a classic reversal pattern, especially reliable when formed at major resistance zones after an extended bullish run.
Characteristics from the chart:
Equal highs at the tops.
Clear neckline support level (midpoint between the tops).
Momentum weakening (notice smaller candles near Top 2).
Sellers stepping in with more aggression.
Once the neckline breaks, it confirms the pattern and activates the short setup.
📉 Trading Plan:
Here’s how the setup shapes up from a trade management perspective:
✅ Entry:
Watch for a break and 1H candle close below the neckline (~3,100 level) to confirm bearish breakout.
🔐 Stop Loss:
Place it above Top 2 or ATH resistance level, near 3,165.661.
This level also aligns with institutional liquidity — a common “stop hunt” zone.
🎯 Target:
The measured move target lies around 3,069.167.
This level is derived by measuring the height from the tops to the neckline and projecting downward.
📊 Confluence Factors (Why This Setup Is Strong):
Double Top at resistance = classic bearish setup.
Major resistance zone + ATH overhead = strong rejection point.
Rounded bottom before rally shows a full cycle from accumulation → markup → distribution.
Psychological level around 3,100 acting as neckline.
Potential risk-reward ratio of 1:2 or better, depending on entry and stop placement.
⚠️ Risk Consideration:
Avoid premature entries. Let the market confirm the breakdown. False breakouts are common in gold, especially near key zones. Always use a stop loss and manage your risk per trade (ideally <2% of account).
💡 Final Thoughts:
Gold has had a strong bullish run, but signs of exhaustion are visible. This Double Top setup offers a clean technical structure to trade the possible short-term reversal. If neckline support is broken, expect a swift move toward 3,069 and possibly lower if selling accelerates.
Patience + Confirmation = Profits.
The 1-hour chart of Gold (XAU/USD) reveals a textbook Double Top formation, signaling a potential trend reversal after a strong bullish rally. The price action has moved from a rounded accumulation base (curve area) into a critical resistance zone, where signs of exhaustion are now emerging.
This setup offers a clear bearish opportunity if price breaks below the neckline, with a well-defined target and stop-loss level. Let’s dive into the detailed breakdown.
🔄 Phase 1: The Bullish Rally from the Curve Area
The market initiated a strong bullish move from the support level around 3,000–3,020, forming a rounded bottom. This curve pattern is a classic accumulation structure, indicating that buyers were gradually stepping in to absorb supply.
Key observations:
Multiple attempts to break the support failed.
Smooth curve formation suggests smart money accumulation.
Once price broke above minor resistance, momentum accelerated.
This move led the price straight into a critical resistance zone, which has historically acted as a supply area.
🟥 Phase 2: Inner Resistance Zone & Rejection
Price tapped into the Inner Resistance Zone (highlighted in purple), a key area that aligns with previous swing highs. This zone acts as a decision point — either bulls break out or bears take control.
Price made two strong attempts to break through this zone:
Top 1 formed as the initial reaction.
After a slight pullback, price re-tested the same level and failed again (Top 2).
This failure to make a new high is the first signal of bullish weakness and sets the stage for a Double Top reversal.
🧱 Phase 3: Double Top Pattern Identified
A Double Top is a classic reversal pattern, especially reliable when formed at major resistance zones after an extended bullish run.
Characteristics from the chart:
Equal highs at the tops.
Clear neckline support level (midpoint between the tops).
Momentum weakening (notice smaller candles near Top 2).
Sellers stepping in with more aggression.
Once the neckline breaks, it confirms the pattern and activates the short setup.
📉 Trading Plan:
Here’s how the setup shapes up from a trade management perspective:
✅ Entry:
Watch for a break and 1H candle close below the neckline (~3,100 level) to confirm bearish breakout.
🔐 Stop Loss:
Place it above Top 2 or ATH resistance level, near 3,165.661.
This level also aligns with institutional liquidity — a common “stop hunt” zone.
🎯 Target:
The measured move target lies around 3,069.167.
This level is derived by measuring the height from the tops to the neckline and projecting downward.
📊 Confluence Factors (Why This Setup Is Strong):
Double Top at resistance = classic bearish setup.
Major resistance zone + ATH overhead = strong rejection point.
Rounded bottom before rally shows a full cycle from accumulation → markup → distribution.
Psychological level around 3,100 acting as neckline.
Potential risk-reward ratio of 1:2 or better, depending on entry and stop placement.
⚠️ Risk Consideration:
Avoid premature entries. Let the market confirm the breakdown. False breakouts are common in gold, especially near key zones. Always use a stop loss and manage your risk per trade (ideally <2% of account).
💡 Final Thoughts:
Gold has had a strong bullish run, but signs of exhaustion are visible. This Double Top setup offers a clean technical structure to trade the possible short-term reversal. If neckline support is broken, expect a swift move toward 3,069 and possibly lower if selling accelerates.
Patience + Confirmation = Profits.
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.
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.