XAU/USD Analysis – Wedge Breakdown & Bearish Trade Setup1. Chart Overview
The 15-minute XAU/USD chart shows a descending wedge pattern forming after a price rally. The wedge is characterized by a series of lower highs and lower lows, signaling a gradual weakening of bullish momentum. After consolidating within this wedge, the price has broken down, suggesting a bearish continuation.
This setup provides a high-probability short trade with clear entry, stop-loss, and multiple take-profit levels.
2. Key Technical Elements
A) Chart Pattern – Descending Wedge Breakdown
A descending wedge is typically a bullish reversal pattern when forming at the bottom of a downtrend. However, in this case, it appears at the end of a corrective move, making it a bearish continuation setup.
The upper trendline (black dashed line) acts as resistance, preventing price from breaking higher.
The lower trendline (solid blue line) represents temporary support.
The wedge narrows as price action contracts, leading to an eventual breakdown.
👉 Breakout Confirmation:
The price has broken below the wedge’s support trendline.
A minor pullback to retest the broken trendline suggests validation of the breakdown.
B) Resistance & Support Levels
1️⃣ Resistance Level (Sell Zone) – $3,100 to $3,135
This area previously acted as a supply zone, rejecting bullish attempts.
Price was unable to sustain above this level, leading to further downside pressure.
Stop-loss should be placed above this level ($3,135.57) to protect against invalidation.
2️⃣ Support Level (Buy Zone) – $3,050 to $3,056
This was a previous reaction zone where price briefly bounced before continuing lower.
Now acting as Take Profit 1 (TP1) at $3,056.58.
3️⃣ Breakout & Retest
After breaking the wedge, price retested the trendline but failed to reclaim it, confirming the bearish trend.
3. Trade Setup & Execution
🔵 Entry Point:
Short trade activation upon the breakdown and retest of the wedge structure.
Price rejection at the trendline confirms seller strength.
🔴 Stop-Loss:
Placed at $3,135.57, slightly above recent swing highs.
This protects against false breakouts or sudden reversals.
🎯 Take Profit Levels:
TP1 ($3,056.58): First target where buyers might step in.
TP2 ($3,022.39): Midway target, acting as another strong support.
TP3 ($2,985.44): Final target where price may stabilize or reverse.
4. Market Context & Confirmation Indicators
📉 Bearish Confirmation:
Strong downward momentum suggests continued selling pressure.
Price action is failing to make new highs, confirming lower highs and lower lows.
📊 Risk-to-Reward Ratio (RRR):
The trade offers a favorable RRR, as the downside potential is significantly larger than the stop-loss range.
⚡ Additional Confirmation:
A strong bearish candle confirmed the breakout, rejecting higher levels.
Potential support breakouts suggest that price could reach TP3 if bearish momentum continues.
5. Conclusion – Trading Strategy Summary
✅ Pattern Identified: Descending Wedge Breakdown (Bearish)
✅ Trade Direction: Short (Sell)
✅ Entry Trigger: Breakout & Retest of the Trendline
✅ Stop-Loss: Above $3,135.57 (Wedge Resistance Zone)
✅ Take Profit Targets:
TP1: $3,056.58
TP2: $3,022.39
TP3: $2,985.44
📌 Final Thoughts:
This setup provides a high-probability trade with a clear breakdown structure and downside potential. If the price continues to respect the bearish trend, reaching all TP levels is likely. However, traders should monitor for reversal signals and manage risk accordingly.
🔔 Risk Warning: Always use proper risk management and adjust positions according to market conditions! 🚀
