After the flash crash last week, Gold move up was parabolic. After correcting its move in the bullish impulse, it has to correct its bullish impulse itself. We will analyze Gold on H4 for intra-day or swing setups.

- Market structure: Gold tapped 1795 this week and was stalled by the strong resistance area. The resistance area was earlier broken with force and was not retested. Therefore, Gold had to come back to consume its orders from the order block at this level. The support we are targeting for profit taking is 1762. It should be noted, Gold trend is bullish now and the short setup we are anticipating, it’s just the corrective move.

- Trendline: Gold had an ascending trendline formed, which was pierced with force of a full bearish candle. The validation of the breakout sell was complete after the market formed candles below the trendline- opening and closing. After the trendline break, Gold retested the resistance area once more and continued moving down.

- Retracement: The golden retracement level of 75-78.6% aligns with the resistance level and is at a price point of 1792. Given the resistance level is also a supply zone, the retracement level will play out strongly. The impact has already initiated to absorb the move down.

- EMA's: EMA 200 is bearish and EMA 50 is bullish. This EMA divergence emerges when market tends to range. The EMA 200 was retested at the resistance level, which adds to a confluence factor for our short trade plan. After the break of the EMA 200, Gold had left the EMA without retesting. As this is the first retest of the bearish EMA 200 break, we can expect a strong reaction of the prices. EMA 50 broke towards the bullish side, again leaving the retest untested. Therefore, we expect the retest of EMA 50 to take place in confluence with the support. This EMA 50 retest will be our first profit target.

- RSI/CCI: Both oscillators started to decline after tapping their over-bought regions. Currently, RSI is at 57 and CCI at -95. This depicts the RSI still needs to break through the 50 level to turn bearish, whereas CCI, is already bearish. We also see a bearish divergence formed on CCI. Given the CCI first pivot point of divergence was at an over-extended level of 323, the impact of this divergence has major strength.

Bear in mind this is an intraday short setup. Other than this, we are still bullish on Gold. To minimize risk, we will close our shorts as soon as market breaks the resistance level.

Reminder on Gold shorts

Aug 19 2021

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