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XAUUSD: Recovery appears complete as gold price resumes next phase of downtrend
Hi everyone, this is my opinion on the current XAUUSD setup.
market analysis
Gold remains under pressure, with the latest price action suggesting the latest phase of recovery is over. The rebound within the upper supply zone has been rejected instead of developing into a broader reversal, and the price has now begun heading towards a new downward phase.
Looking at the chart structure, XAUUSD is still trading within a medium-term descending channel, with major trendlines continuing to limit upward attempts. This keeps the overall market tone negative, although a short-term rebound is likely.
The current retracement area has been tested and the price is currently reacting below the 4440-4500 area. This area is important because it acts as a selling area where liquidity and previous resistance overlap. As long as gold prices remain below this supply area, sellers remain in control and the scenario for a continued downtrend remains valid.
Above this, the next significant resistance lies around the 4600-4620 level, which is another area of overhead supply that could become an additional selling area if the price mounts a deeper corrective rally. On the downside, the 4300 area remains the first important liquidity area to watch, while a broader downside extension still points to 4134 if momentum continues to build.
The important thing here is that gold did not break out of the downtrend structure. Prices remain below the major descending trendline, which means dips should be viewed with caution and as an opportunity for sellers to reposition.
Key price areas to watch
Current price range: around 4442
Main sales area: 4440–4500
Minor Resistance/Supply Zone: 4600–4620
Lower liquidity support: around 4300
Main downside target: around 4134
My scenarios and strategies
My preferred view is that the recent rally is complete and gold now begins a fresh move lower within a broader downside structure.
As long as XAUUSD remains below the 4440-4500 resistance zone and continues to trade below the downtrend line, I would still favor selling the rally rather than looking for aggressive long positions. If the price continues to weaken from this area, the first downside target lies near 4300. If the downside momentum expands further, the market may extend towards 4134.
If a deeper correction occurs first, the 4600-4620 area will be the next area to watch to reject the downtrend. Only a strong rally above the major resistance structure would weaken the case for a continuation of the current downtrend.
This is the setup I’m monitoring right now. Thank you for reading and always manage your risks carefully.
