Market Context
As of May 14, 2025, XAU/USD is demonstrating classic Smart Money behavior in a highly reactive market. Price has recently tested a higher time frame supply zone (3,248–3,260) and sharply rejected, forming a series of bearish BOS (Break of Structure) and CHoCH (Change of Character) signals — confirming the presence of institutional activity.
Following this move, price descended into a previously established demand zone between 3,220 and 3,228, creating a high-probability reversal setup based on confluences from SMC, VSA, and price action tools.
Key Observations from the Chart
1. Smart Money Concepts (SMC)
- Bearish BOS and CHoCH confirm a temporary market reversal.
- Liquidity was swept below equal lows, triggering a potential accumulation phase.
- Price tapped the blue demand zone (3,220–3,228), which aligns with previous reaction levels.
2. Volume Spread Analysis (VSA)
- A notable volume spike occurred during the sell-off into the demand zone.
- Candle showed a long lower wick, indicating absorption and potential stopping volume.
- This suggests smart money may be entering long positions as weak hands exit.
3. Price Action Confirmation
- A bullish engulfing candle formed within the demand zone.
- This price action indicates rejection of lower prices and a short-term bullish reversal.
Trade Idea
Bias: Long (Buy)
Entry Zone:
- Between 3,224–3,226, ideally after confirmation from engulfing candle or order block reaction.
Stop Loss:
- Placed slightly below demand zone at 3,219, giving the trade space to breathe.
Take Profit Levels:
- TP1: 3,240 – minor structure and CHoCH area.
- TP2: 3,248 – base of previous supply zone.
- TP3: 3,256 – full mitigation of higher supply.
Risk-to-Reward:
- Expected R:R = 1:4 to 1:5 depending on TP level.
Alternative Scenario – Bearish Breakdown
If price closes below 3,219 with momentum and high volume, the demand zone is considered invalidated. In such a case:
- Look for short opportunities on a retest of 3,224–3,228, now acting as resistance.
- Downside targets: 3,210 and 3,200.
Conclusion
This XAU/USD setup demonstrates a textbook confluence of liquidity sweep, demand zone interaction, and volume-based confirmation — making it a strong candidate for short-term bullish continuation. Combining SMC, VSA, and Price Action gives traders an edge in identifying and executing institutional-grade entries.
Trade with discipline. Let the market come to you.
Disclaimer
This analysis is for educational and informational purposes only and does not constitute financial advice. It is not intended to be used as a basis for any investment decision. Always conduct your own research or consult with a licensed financial advisor before engaging in any trading activity.
