Gold (XAU/USD) continues to exhibit strong bullish momentum on the higher timeframes, with the latest price action suggesting potential continuation — albeit with caution due to short-term rejection from a key supply zone. This article dives into the current price behavior using Smart Money Concepts (SMC), Volume Spread Analysis (VSA), and traditional price action, and outlines a practical trade setup based on these tools.
Market Structure Overview
15-Minute Timeframe
The 15-minute chart paints a clear bullish picture. After a series of Breaks of Structure (BOS) and a key Change of Character (CHoCH) to the upside, price has created a sequence of higher highs and higher lows, confirming bullish control.
Price has recently tapped into a supply zone around $3,344, labeled as a “Weak High”, indicating it could either:
- Be targeted for liquidity, then broken.
- Mark a temporary exhaustion point before a deeper retracement.
There are multiple demand zones to the downside, the most immediate being the $3,315–$3,320 area, followed by a broader $3,280–$3,290 zone.
5-Minute Refinement
Zooming in to the 5-minute chart reveals more precise structural clues:
- A CHoCH occurred shortly after tapping the $3,344 level, signaling potential short-term bearish intent.
- The recent pullback is descending into a previously established bullish order block in the $3,315–$3,320 range — an area of interest for reactive buyers.
Volume Spread Analysis (VSA) Insights
- During the last rally to the $3,344 high, there was a noticeable volume spike, possibly indicating climactic buying or smart money distribution.
- The current pullback is occurring on decreasing volume, suggesting a lack of aggressive sellers — a potential sign of absorption or reaccumulation.
- Look for Stopping Volume, No Supply bars, or Spring patterns within demand zones to confirm bullish entries.
Key Supply & Demand Zones
| Type | Price Range | Strength |
|---|---|---|
| Supply | $3,344 | Weak High |
| Demand | $3,315–$3,320 | Valid, tested |
| Demand | $3,280–$3,290 | Untapped |
| Demand | $3,235 | Deeper swing |
Trade Setup Ideas
Scenario 1: Long (Bullish Continuation Trade)
Thesis: Higher timeframe remains bullish. Current pullback is corrective, not impulsive, and approaching a strong demand zone.
- Entry: Wait for bullish confirmation (e.g., bullish engulfing, Spring, or volume reversal) inside $3,315–$3,320.
- Stop Loss: Below $3,310 (under demand).
- Take Profit:
- TP1: $3,344 (recent high)
- TP2: $3,360 (potential breakout target)
Volume Cue: Look for reversal volume (VSA) to support a bounce.
Scenario 2: Short (Liquidity Sweep Reversal)
Thesis: Price may have completed a liquidity grab at $3,344 and could retrace deeper before another bullish leg.
- Entry: If price retraces to $3,337–$3,340 and shows rejection (e.g., bearish engulfing or VSA weakness).
- Stop Loss: Above $3,346 (above weak high).
- Take Profit:
- TP1: $3,320 (immediate demand)
- TP2: $3,290 (next key zone)
Volume Cue: Look for high bearish volume or no demand candles near the supply.
Bias Summary
| Aspect | Bias |
|---|---|
| Higher Timeframe Trend | Bullish |
| Short-Term Action | Bearish pullback |
| Primary Strategy | Buy the dip in demand zone |
| Secondary Strategy | Sell rejection from supply (scalp only) |
Conclusion
The gold market remains in bullish territory overall, with short-term retracements presenting opportunities rather than threats. A high-probability trade setup exists on the long side from $3,315–$3,320, with supporting structure, VSA cues, and price action. Traders should remain flexible and allow price to confirm before executing positions.
As always, manage risk appropriately and confirm with your own analysis before entering trades.
