On June 30th, the strategy for gold was straightforward: wait for market confirmation. We outlined two key reference points for the day, 4095 and 4045. The approach was twofold: first, to look for selling opportunities while defending the previous Friday's high of 4095, and second, to enter short positions upon a confirmed break below 4045, targeting a rebound near 4060. Subsequently, after a continuous decline to the 4000 level in the evening, a corrective bounce occurred. However, the 4045/50 area, having been breached, now acts as a resistance level (a role reversal from support). A failure to surpass this area on the rebound would signal another potential decline, presenting another selling signal.
After hovering around 4010 in the early morning hours, the gold price weakened further at the market open, directly breaking below the previous low. With gold once again falling below the $4000 mark, the question is how to respond today. The approach should be familiar and clear. Our overall trading bias remains bearish. The breach of the significant psychological $4000 level undermines bullish confidence, creating a sense of renewed vulnerability. As before, the direction is clear; the only consideration is the optimal entry point for short positions.
The early morning and overnight high of 4022 serves as today's pivotal level. A sign of continued weakness would be a failure to test or break above this point. The bearish outlook remains intact as long as price action stays below this level. Following the break below the 4000 support, this level now acts as a resistance zone. In the afternoon session, one should not anticipate a substantial corrective rebound. In fact, the smaller the rebound, the higher the stability and reliability of the short setup. Therefore, in the afternoon, selling opportunities should be sought below the converted resistance near 4000. The immediate downside focus is the low of 3942. A break below this level would indicate a continuation of the weak trend, and any rebound should still be treated as a selling opportunity. In this scenario, the entry zone for short positions would need to be adjusted closer to the 3980 area, with a stop-loss set above 3988, allowing for flexible participation within the 3960-80 range.
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