XAUUSD 3M 1. Elliott Wave Structure and Key Levels
Wave 5 Completion (2,747.14): The fifth wave peaks around $2,747.14, reaching a 1.618 extension, suggesting this could be a point of reversal. The formation of volume divergence at this level indicates potential weakness in bullish momentum, marking a critical level to watch for a possible trend change.
Wave 1 (Current Correction Phase): The chart shows a beginning corrective move from Wave 5, indicating an A-B-C structure may follow. This corrective phase could bring prices down to fill previous gaps and approach key support levels.
2. Wyckoff Phases and Distribution Structure
Phase A (Accumulation - $1,046.23 to $1,512.84): This phase includes a consolidation around the $1,046.23 low and forms the base before a significant rally. The Automatic Rally (AR) and Secondary Test (ST) suggest the end of Phase A and a potential upward shift in market sentiment.
Phase B (Mark Up and Distribution at Resistance): After accumulation, prices move up in a mark-up phase, testing the Resistance Line of BC Distribution. This area includes Upthrust (UT) and Upthrust After Distribution (UTAD), which are signs of potential distribution before a downtrend.
Phase C (Breakdown Expected): Phase C may involve the start of a downtrend from Wave 5, with price likely returning to lower levels for further testing. This phase includes the Sign of Weakness (SOW) and anticipates a retest of support near $1,512.84.
3. Fibonacci Levels
0.618 Retracement ($890.62): The 0.618 retracement level is marked as a strong support, below which price should not pass without invalidating the bullish wave structure. This level could act as a long-term support area during the corrective phase.
1.236 Extension ($2,369.74): The 1.236 level marks a significant potential reversal area for Wave 5. A move back to this level could signal the completion of a deeper pullback, possibly a key point of interest for traders looking for long-term entries.
4. Liquidity and Key Order Blocks
Liquidity Void: The chart highlights a liquidity void in the three-month time frame (3M), representing an area where price may revisit to fill previous inefficiencies. This void may act as a magnet, attracting price downward in the corrective phase.
Buy-Side Liquidity (BSL) Area: The Buy-Side Liquidity (BSL) near the recent highs represents a key area where stop losses and limit orders are likely concentrated. This region may experience volatility as larger players look to capitalize on retail stop losses.
5. Support and Resistance Lines
Resistance Line - BC Distribution ($1,720.00): The $1,720.00 level acts as a key resistance line in the distribution phase. A break above or below this level in Phase B may confirm the direction of the trend and could signal a shift in momentum.
Support Line - AR Distribution ($1,512.84): The $1,512.84 level serves as a critical support in the accumulation phase and may act as a bottom if the market revisits this area in the corrective structure.
6. Break of Structure (BOS) and Market Sentiment Shifts
BOS Wave 3 (12M): The Break of Structure (BOS) in Wave 3 on the 12-month chart signals a major structural shift, often indicating the end of one trend and the beginning of another. This point may see increased volatility and shifts in market sentiment.
BOS in Phase B (3M): The BOS within Phase B on the three-month time frame highlights potential points of interest for continuation or trend reversal. It indicates that a shift in sentiment may occur, influencing market participants to prepare for trend changes.
7. Dealing Ranges and Points of Control (POC)
Dealing Range (12M-3M): This range, marked at recent swing high and low levels, provides a boundary for price movement, with the Point of Control (POC) likely aligning with high-volume areas. The dealing range helps in identifying areas where price could consolidate or reverse.
Current Trend (Dealing Range for Wave 4): The range defined for Wave 4, including swing highs and lows, offers insight into the ongoing market structure. Observing price behavior within this range helps to gauge the momentum of the corrective wave.
8. Next Week’s Trading Plan
Primary Strategy: The corrective phase is expected to continue, with a probable downward move to fill liquidity voids and test lower support areas.
Key Target Levels:
Downside Targets: Monitor support around $1,720.00 (Resistance Line) and $1,512.84 (Support Line). These levels could provide entry points if price tests and holds as support.
Upside Targets: Watch for potential shorting opportunities if price retests resistance near the recent swing high at $2,747.14.
Risk Management: Stop-loss orders should be placed above recent highs around $2,800.00 to manage risk if there’s an unexpected upward move.
Volume and Price Action: Look for volume divergence or signs of weakness near resistance levels, especially around the 1.618 level ($2,747.14), as they could signal a trend reversal.
Summary of Key Points
Wave 5 likely completed at $2,747.14, with a corrective A-B-C structure now underway.
Wyckoff Distribution phase suggests further downside as Phase C unfolds, targeting key support levels.
Liquidity voids and POC levels act as magnets for price, which may revisit these areas during corrections.
The Resistance Line at $1,720.00 and Support Line at $1,512.84 are essential for tracking entry and exit points in line with the current downtrend.
