Gold is standing on a critical point.
Price is sitting just above the weekly support we discussed in the previous posts. On the 4-hour timeframe there has been a small rejection from that support — but it is weak. It is not even close to a confirmation.
The weekly support is strong. But support alone is not a guarantee that price will reverse from there. Assuming a bullish trend without a clear BOS to the upside would be wrong. Assuming a bearish trend without a proper breakout of the weekly support on the higher timeframes would also be wrong.
This is a great zone to watch. It is not yet a zone to trade.
The 4-Hour Chart
Price has rejected from the weekly support on the 4-hour chart. But my concern is that the 4-hour liquidity zone below has still not been swept. And every time price rejects without sweeping that liquidity, it makes the sweep more likely — not less.
Here is why. If I can see this support zone, so can thousands of other traders. Many of them will have placed their stop losses just below the support for their long trades. Others are waiting for a breakout below support to short — placing their sell orders at exactly the same level as those stop losses. Look at the chart and you can see multiple equal lows forming a clear liquidity zone right below the weekly support. That is a significant cluster of orders sitting there waiting to be triggered.
My Two Conditions Before Taking Any Trade
If I am looking for a long:
I will wait for price to sweep the 4-hour liquidity zone first. Then I need a BOS to the upside. Only after both of those conditions are met will I even check whether my setup has formed. If either condition is missing — no trade, even if the setup looks perfect.
If I am looking for a short:
I will wait for price to break the weekly support with conviction. Then I need a BOS to the downside. Again — only after both conditions are met will I look for my setup. If either is missing — no trade.
Two conditions. Both must be met. No exceptions.
That is not caution for its own sake — it is the filter that separates a trade from a guess.
Bye for now, take care.
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