As of October 26, the overall trend in gold can be precisely described as a "bearish consolidation," with a clearly defined downward trajectory. At the start of last week, gold prices were still in a phase of range-bound consolidation, with no clear direction and relatively stable fluctuations. However, from last Thursday onward, the market dynamic shifted dramatically, and gold entered a sustained one-way decline, with bearish forces taking full control. By last Friday, gold prices staged a brief and modest rebound, but the recovery was weak and short-lived, quickly falling back again without any signal of a reversal. Currently, gold remains firmly in a low-level, weak state.
To understand the current gold market and execute trades effectively, one only needs to focus on a single critical level: 4030, which serves as the short-term dividing line between strength and weakness. Simply put, 4030 is the boundary between bullish and bearish trends and directly determines the overall trading direction. As long as gold prices remain below 4030, it indicates that bearish forces are dominant and the market is in a weak, declining pattern, meaning our trading approach must follow the trend and be bearish. Conversely, if gold prices can effectively break and hold above 4030, it would signal the end of the bearish trend, a complete shift to a stronger market structure, and an immediate switch from a bearish to a bullish outlook.
In the current weak market, the two most common mistakes that short-term traders must resolutely avoid are as follows. The first is blindly chasing short positions at low levels. Many people, seeing prices continue to fall, rush to follow the trend and short, but downward momentum at low levels can easily exhaust itself, with rebound corrections occurring at any time. Blindly chasing shorts can easily lead to being trapped and put in a passive position. The second is counter-trend bottom-fishing for rebounds. In a weak market, rebounds are merely temporary corrections, not true upward reversals. Counter-trend bottom-fishing has an extremely low margin for error and is highly likely to result in losses and being trapped. Both of these operations violate the core principle of trend-following and are the main reasons most people lose money in short-term trading.
The most prudent and market-consistent trading approach right now is to determine direction on the larger timeframe and find entry timing on the smaller timeframe. The larger timeframe has already confirmed a weak bearish structure, and the overall direction is firmly bearish. We do not need to subjectively guess whether the market will reverse upward; we simply need to patiently wait for suitable entry opportunities. The optimal trading moment is when gold prices stage a modest rebound correction and form a short-term small top structure below the upper short-term resistance level of 4030, at which point we can enter short positions in line with the trend. Just like last Friday's price action, when prices rebounded near the 4030 area and formed a small-level top at 4020 before falling again, that was a standard trend-following short opportunity.
The core of trading is never frequent operation, but rather setting a trading plan in advance, adhering to the trend direction, and waiting for precise signals before executing prudently. For today's short-term trading levels, reference can be made to the following: 1. Primarily bearish — if the upper side again touches near 4030 and faces pressure, one can short first, with a stop-loss at 4050 and a short take-profit target near 3990-3980; 2. Secondary long attempt — if the lower side again tests support near 3075-3080, one can attempt a long position with a small stop-loss at 3065, aiming for a small risk with large potential reward, with a long take-profit target looking up to near 4020-4030.
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