Gold (XAU/USD) continues to exhibit volatile price movements as institutional activity becomes more evident. By combining Smart Money Concepts (SMC), Volume Spread Analysis (VSA), and classic price action, we gain a clearer picture of where the market is likely to move next.
Smart Money Concepts (SMC) – Decoding the Market’s Blueprint
The 5-minute chart displays a well-defined shift in market structure. Here’s a breakdown of key SMC elements:
Change of Character (CHoCH) and Break of Structure (BOS)
- A bullish CHoCH marked the end of the earlier downtrend, followed by several BOS candles confirming an uptrend.
- After reaching the high around $3,255, the market exhibited a CHoCH to the downside, indicating a potential trend reversal or deeper retracement.
Demand Zone (~$3,205–$3,210)
This zone was created following a clear CHoCH and multiple BOS confirmations. Price aggressively moved upward from this level, suggesting it is a key area of re-accumulation. The market has recently returned to this zone and is now showing signs of holding support.
Supply Zone (~$3,245–$3,255)
After price peaked, a sharp CHoCH and BOS occurred, creating a supply zone where institutional selling likely took place. This area is now a strong resistance level where smart money may continue to offload positions.
SMC Outlook:
- Buy from $3,205–$3,210 (demand zone).
- Sell from $3,245–$3,255 (supply zone).
Volume Spread Analysis (VSA) – Spotting Professional Activity
Volume provides insight into the intentions of smart money:
- High volume on bullish candles from the $3,205 area indicates professional buying.
- Low volume on the retracement candles following the bullish move confirms a lack of selling pressure — a bullish signal.
- Conversely, increased volume during down moves around $3,255 suggests strong selling interest.
VSA Outlook:
- Demand at $3,205–$3,210 is supported by volume.
- Supply at $3,245–$3,255 indicates institutional selling pressure.
Price Action – Reading the Market’s Language
From a price action perspective:
- The bullish rally formed higher highs and higher lows, clearly visible up to the $3,255 region.
- The retracement back to $3,210 presents a potential higher low formation, pending confirmation.
- The current price action shows small-bodied candles with decreasing bearish momentum, suggesting possible exhaustion of sellers.
Candlestick Patterns to Watch:
- Bullish engulfing, pin bars, or strong bullish momentum from the demand zone would validate a long position.
- Rejection wicks or bearish engulfing patterns near the supply zone may present high-probability short entries.
Conclusion – High-Probability Trade Zones
| Bias | Price Zone | Strategy | Confluence |
|---|---|---|---|
| Long | $3,205–$3,210 | Buy on bullish confirmation | SMC demand + VSA buying + price action support |
| Short | $3,245–$3,255 | Sell on bearish confirmation | SMC supply + VSA selling + price action rejection |
Final Thoughts
Gold is currently trading between well-defined institutional zones. Traders should wait for confirmation at these key levels, aligning SMC, VSA, and price action for higher probability trades. Whether you’re scalping or swing trading, the $3,205–$3,210 demand zone is especially attractive for long setups based on its volume and structural significance.
