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On the daily chart, the price has created clear waves of bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a correction is happening and the price which is moving higher has reached a strong resistance zone formed by the previous swing lows and highs. Also, we have a bearish divergence that has formed between the first high that has formed on 15th November 2022 and the second high that has formed on 5th December 2022 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, there are no signs opposing this short term bearish view at the moment. We may now move down to lower timeframe and look for evidences supporting this short term bearish view.
On the H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 1804.36 and the second high that has formed at 1809.94 based on the MACD indicator. The price then moved lower and broke below the last low at 1778.89 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further after pullbacks.
Gold D1(Daily) Chart Analysis
Gold H1(1 Hour) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Arvinth Akash
Traders Academy Club Team
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