XAU/USD (Gold) Short-Term Market Forecast for the Upcoming Week
The price range of interest is between $2,584 - $2,688, where key zones, patterns, and potential reversals are likely to occur.
Wyckoff Distribution Phase:
The chart follows the Wyckoff Distribution schematic, and it appears the market is in Phase B, nearing the Last Point of Supply (LPSY), where institutional traders distribute their positions.
Preliminary Supply (PSY): An initial increase in volume signals that sellers are entering the market, leading to the Buying Climax (BC).
Automatic Reaction (AR): The reaction that follows BC, with the price dropping to test supply.
Secondary Test (ST): Price retests near the BC level, confirming resistance.
Sign of Weakness (SOW): The price shows lower highs, indicating that supply is overwhelming demand.
The current position indicates that the market has UT (Upthrust), testing the upper limits, followed by an expected downward move. This suggests a potential continuation of the bearish trend after the UT.
Elliott Wave Analysis:
Wave count on the 1-hour chart indicates a possible completion of Wave (iii) within a larger degree. A series of Impulse Waves (i-ii-iii-iv-v) are forming, and we are approaching Wave (iv) of the corrective phase.
Wave (i) begins the downward movement, breaking the previous uptrend.
Wave (iii) indicates a sharp decline with significant momentum, which aligns with Wyckoff’s SOW.
The upcoming Wave (iv) is expected to retrace back up but stay below $2,631 (highlighted as the potential invalidation level). Once Wave (iv) completes, Wave (v) is expected to resume the downtrend.
Harmonic Pattern:
A Bearish Gartley Pattern is forming, as seen on the 1-hour chart. The legs of the pattern are defined by Fibonacci retracement levels, which indicate potential reversal points.
Leg XA starts at the peak and retraces to form Point B.
The retracement reaches the 0.618 Fibonacci level, around $2,665 - $2,659, marking Point C.
Point D is expected to align around $2,631, completing the Gartley formation and signaling a strong area for a possible reversal.
The 0.618 (Golden Ratio) retracement is a critical level for this harmonic pattern, marking potential resistance.
Key Supply and Demand Zones:
Supply Zone (Sell-Side Liquidity): The price reached the Last Point of Supply (LPSY), near $2,688, where the price likely hit resistance due to heavy institutional selling.
Demand Zone (Buy-Side Liquidity): A critical Demand Zone is marked around $2,584, where buyers are expected to step in. This zone will likely hold unless a strong breakout occurs below it.
Key Fibonacci Levels & Support Zones:
0.5 Fibonacci Retracement at $2,659 and 0.618 at $2,665 mark key resistance zones. These levels will act as critical sell points if the price attempts to retrace upward.
1.618 Extension: Indicates further downside to $2,570, a potential target for the Wave 5 low before any major reversal.
Critical Price Levels:
$2,688 (Upper Resistance): The invalidation zone for any continued upside move.
$2,631 (Wave 5 Target): The point at which the bearish Elliott Wave and harmonic pattern align.
$2,584 (Demand Zone): This is where we expect buy-side liquidity to increase, as it is near the Point of Control (POC).
$2,570 (1.618 Fib Extension): Likely the final wave low for the next cycle.
SMC (Smart Money Concepts):
Liquidity Zones: In SMC, price movement is driven by liquidity hunts. We observe two critical zones:
Buy-side liquidity at $2,688, representing a significant liquidity grab near the Last Point of Supply (LPSY), where institutional orders likely get triggered.
Sell-side liquidity below $2,584, aligning with Wave 5 projections, where institutions could be placing orders to target stop hunts before a possible reversal.
Order Blocks:
A Bearish Order Block has formed between $2,659 - $2,665. This represents the last up move before a significant downshift, serving as a zone where large institutions could enter sell positions. This OB correlates with the 0.618 Fibonacci retracement and could act as a major supply zone.
The Bullish Order Block sits near $2,584, representing the origin of the impulsive upward move. This level is highly significant, as it aligns with the demand zone and Wave (iii) termination in Elliott Wave Theory.
Break of Structure (BOS):
We’ve seen a clear Break of Structure (BOS) around $2,631, where the market took out previous higher lows, confirming a shift from bullish to bearish order flow.
Price is now forming lower highs and lower lows, signaling bearish control in the current structure.
Fair Value Gap (FVG):
There’s an imbalance, or Fair Value Gap, left untested around $2,650, which may act as a magnet for price retracements. This gap represents inefficiency in price where only sell orders filled, leaving buy orders unmitigated.
This FVG aligns with Wave (iv) retracement and could provide a short-term target before the market resumes its bearish trend towards Wave (v) completion.
Premium/Discount Zone:
Using the Fibonacci tool from the High (UT) at $2,688 to the Low (A) around $2,584, the market is currently trading in the premium zone (above 50%), which is an ideal area to look for shorting opportunities.
If price returns to this premium area between $2,659 - $2,665, it offers optimal sell entries for institutions, aligning with the SMC bearish order block and harmonic resistance.
ICT (Inner Circle Trader) Concepts:
Market Structure Shift (MSS):
The MSS occurred when the price broke below the previous support at $2,631, confirming a bearish bias and creating room for price to fall further towards the sell-side liquidity near $2,584.
The market is now in a bearish market structure, and any retracement will likely serve as a setup for further downside liquidity sweeps.
Liquidity Void:
A Liquidity Void exists between $2,600 - $2,570, where the price could make a rapid move with little resistance. This void, created by an inefficient, one-sided price movement, is a common ICT concept where price "fills in" after an impulsive move. This zone aligns with the projected 1.618 extension of the Elliott Wave structure.
Optimal Trade Entry (OTE):
The OTE zone for shorts is found between the 0.618 - 0.705 Fibonacci levels, around $2,659 - $2,665. This corresponds with the bearish harmonic pattern, making it an optimal level to target for sell-side entries.
For buyers, the OTE zone exists below $2,584, around the $2,570 - $2,561 zone, near the 1.786 Fibonacci extension, where a reversal may occur after the liquidity grab below Wave (v).
Power of Three:
Accumulation has occurred below $2,584, where smart money institutions began accumulating positions at a discount.
The current phase is the Manipulation phase, where price is retracing upward to clear liquidity (likely at the bearish order block and harmonic resistance).
The final phase, Distribution, will occur as price moves downward towards $2,570, aligning with the completion of Wave 5.
Institutional Reference Points:
Weekly Open: The W Close level marked on the chart is critical for institutional reference. Should price remain below this level, it strengthens the bearish bias. Conversely, a move above it might suggest a temporary bullish retracement.
Session Highs/Lows: ICT emphasizes focusing on key session highs and lows. The recent session high at $2,688 and session low near $2,584 are important for framing liquidity sweeps.
Judas Swing:
Watch for a potential Judas Swing on Monday, where the price may spike up early in the session (towards $2,659 - $2,665) to grab liquidity, before reversing to resume the bearish trend. This manipulation move aligns with ICT's expectation of trapping early buyers.
Outlook for Next Week:
The market is likely to continue its corrective move down to $2,631, completing the Wave 5 of the current structure.
After hitting the $2,631 level, expect a minor retracement, possibly back up to $2,659 or $2,665 (harmonic resistance).
The chart suggests that if the price cannot break $2,688, the overall bearish structure will remain intact.
A break below $2,584 signals a continuation of the bearish trend, possibly reaching $2,570 before finding significant support.
Traders should focus on these levels and wait for confirmation through price action and volume, especially near the 0.618 Fibonacci level and the Wave 5 completion zone.
Wyckoff Distribution Phase:
The chart follows the Wyckoff Distribution schematic, and it appears the market is in Phase B, nearing the Last Point of Supply (LPSY), where institutional traders distribute their positions.
Preliminary Supply (PSY): An initial increase in volume signals that sellers are entering the market, leading to the Buying Climax (BC).
Automatic Reaction (AR): The reaction that follows BC, with the price dropping to test supply.
Secondary Test (ST): Price retests near the BC level, confirming resistance.
Sign of Weakness (SOW): The price shows lower highs, indicating that supply is overwhelming demand.
The current position indicates that the market has UT (Upthrust), testing the upper limits, followed by an expected downward move. This suggests a potential continuation of the bearish trend after the UT.
Elliott Wave Analysis:
Wave count on the 1-hour chart indicates a possible completion of Wave (iii) within a larger degree. A series of Impulse Waves (i-ii-iii-iv-v) are forming, and we are approaching Wave (iv) of the corrective phase.
Wave (i) begins the downward movement, breaking the previous uptrend.
Wave (iii) indicates a sharp decline with significant momentum, which aligns with Wyckoff’s SOW.
The upcoming Wave (iv) is expected to retrace back up but stay below $2,631 (highlighted as the potential invalidation level). Once Wave (iv) completes, Wave (v) is expected to resume the downtrend.
Harmonic Pattern:
A Bearish Gartley Pattern is forming, as seen on the 1-hour chart. The legs of the pattern are defined by Fibonacci retracement levels, which indicate potential reversal points.
Leg XA starts at the peak and retraces to form Point B.
The retracement reaches the 0.618 Fibonacci level, around $2,665 - $2,659, marking Point C.
Point D is expected to align around $2,631, completing the Gartley formation and signaling a strong area for a possible reversal.
The 0.618 (Golden Ratio) retracement is a critical level for this harmonic pattern, marking potential resistance.
Key Supply and Demand Zones:
Supply Zone (Sell-Side Liquidity): The price reached the Last Point of Supply (LPSY), near $2,688, where the price likely hit resistance due to heavy institutional selling.
Demand Zone (Buy-Side Liquidity): A critical Demand Zone is marked around $2,584, where buyers are expected to step in. This zone will likely hold unless a strong breakout occurs below it.
Key Fibonacci Levels & Support Zones:
0.5 Fibonacci Retracement at $2,659 and 0.618 at $2,665 mark key resistance zones. These levels will act as critical sell points if the price attempts to retrace upward.
1.618 Extension: Indicates further downside to $2,570, a potential target for the Wave 5 low before any major reversal.
Critical Price Levels:
$2,688 (Upper Resistance): The invalidation zone for any continued upside move.
$2,631 (Wave 5 Target): The point at which the bearish Elliott Wave and harmonic pattern align.
$2,584 (Demand Zone): This is where we expect buy-side liquidity to increase, as it is near the Point of Control (POC).
$2,570 (1.618 Fib Extension): Likely the final wave low for the next cycle.
SMC (Smart Money Concepts):
Liquidity Zones: In SMC, price movement is driven by liquidity hunts. We observe two critical zones:
Buy-side liquidity at $2,688, representing a significant liquidity grab near the Last Point of Supply (LPSY), where institutional orders likely get triggered.
Sell-side liquidity below $2,584, aligning with Wave 5 projections, where institutions could be placing orders to target stop hunts before a possible reversal.
Order Blocks:
A Bearish Order Block has formed between $2,659 - $2,665. This represents the last up move before a significant downshift, serving as a zone where large institutions could enter sell positions. This OB correlates with the 0.618 Fibonacci retracement and could act as a major supply zone.
The Bullish Order Block sits near $2,584, representing the origin of the impulsive upward move. This level is highly significant, as it aligns with the demand zone and Wave (iii) termination in Elliott Wave Theory.
Break of Structure (BOS):
We’ve seen a clear Break of Structure (BOS) around $2,631, where the market took out previous higher lows, confirming a shift from bullish to bearish order flow.
Price is now forming lower highs and lower lows, signaling bearish control in the current structure.
Fair Value Gap (FVG):
There’s an imbalance, or Fair Value Gap, left untested around $2,650, which may act as a magnet for price retracements. This gap represents inefficiency in price where only sell orders filled, leaving buy orders unmitigated.
This FVG aligns with Wave (iv) retracement and could provide a short-term target before the market resumes its bearish trend towards Wave (v) completion.
Premium/Discount Zone:
Using the Fibonacci tool from the High (UT) at $2,688 to the Low (A) around $2,584, the market is currently trading in the premium zone (above 50%), which is an ideal area to look for shorting opportunities.
If price returns to this premium area between $2,659 - $2,665, it offers optimal sell entries for institutions, aligning with the SMC bearish order block and harmonic resistance.
ICT (Inner Circle Trader) Concepts:
Market Structure Shift (MSS):
The MSS occurred when the price broke below the previous support at $2,631, confirming a bearish bias and creating room for price to fall further towards the sell-side liquidity near $2,584.
The market is now in a bearish market structure, and any retracement will likely serve as a setup for further downside liquidity sweeps.
Liquidity Void:
A Liquidity Void exists between $2,600 - $2,570, where the price could make a rapid move with little resistance. This void, created by an inefficient, one-sided price movement, is a common ICT concept where price "fills in" after an impulsive move. This zone aligns with the projected 1.618 extension of the Elliott Wave structure.
Optimal Trade Entry (OTE):
The OTE zone for shorts is found between the 0.618 - 0.705 Fibonacci levels, around $2,659 - $2,665. This corresponds with the bearish harmonic pattern, making it an optimal level to target for sell-side entries.
For buyers, the OTE zone exists below $2,584, around the $2,570 - $2,561 zone, near the 1.786 Fibonacci extension, where a reversal may occur after the liquidity grab below Wave (v).
Power of Three:
Accumulation has occurred below $2,584, where smart money institutions began accumulating positions at a discount.
The current phase is the Manipulation phase, where price is retracing upward to clear liquidity (likely at the bearish order block and harmonic resistance).
The final phase, Distribution, will occur as price moves downward towards $2,570, aligning with the completion of Wave 5.
Institutional Reference Points:
Weekly Open: The W Close level marked on the chart is critical for institutional reference. Should price remain below this level, it strengthens the bearish bias. Conversely, a move above it might suggest a temporary bullish retracement.
Session Highs/Lows: ICT emphasizes focusing on key session highs and lows. The recent session high at $2,688 and session low near $2,584 are important for framing liquidity sweeps.
Judas Swing:
Watch for a potential Judas Swing on Monday, where the price may spike up early in the session (towards $2,659 - $2,665) to grab liquidity, before reversing to resume the bearish trend. This manipulation move aligns with ICT's expectation of trapping early buyers.
Outlook for Next Week:
The market is likely to continue its corrective move down to $2,631, completing the Wave 5 of the current structure.
After hitting the $2,631 level, expect a minor retracement, possibly back up to $2,659 or $2,665 (harmonic resistance).
The chart suggests that if the price cannot break $2,688, the overall bearish structure will remain intact.
A break below $2,584 signals a continuation of the bearish trend, possibly reaching $2,570 before finding significant support.
Traders should focus on these levels and wait for confirmation through price action and volume, especially near the 0.618 Fibonacci level and the Wave 5 completion zone.
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