1. Chart Pattern: Head and Shoulders
• The chart clearly displays a Head and Shoulders pattern, which is typically a bearish reversal pattern.
• Left Shoulder: Formed around mid-July, with a peak lower than the head.
• Head: The highest peak in the chart, formed around July 18th-20th.
• Right Shoulder: Formed after the head, with a peak similar to the left shoulder, but lower than the head.
The neckline (the line connecting the lows of the two shoulders) is slightly upward-sloping, which adds to the pattern's complexity but remains a valid indicator.
2. Price Action
• The price broke below the neckline, which often signals a further decline. After the breakdown, the price briefly retested the neckline before continuing downward.
• Currently, the price seems to be hovering near a key support level around 2397.130.
3. Support and Resistance Levels
• Support: Around 2397.130, which aligns with the neckline of the pattern and a previous price congestion area.
• Resistance: Around 2450.000, where the right shoulder was formed. This level may act as resistance if the price attempts to bounce back.
4. MACD Indicator
• The MACD (Moving Average Convergence Divergence) is showing negative values with the MACD line below the signal line, indicating bearish momentum.
• There is also divergence visible in the MACD, which typically suggests that the strength of the recent price movements is weakening.
5. Trendlines
• An upward trendline is visible, but the recent price action has violated this trendline, signaling potential further downside.
• The upward trend was consistent until the head was formed, after which the price struggled to maintain higher levels.
Conclusion:
• Bearish Outlook: The combination of the Head and Shoulders pattern, downward MACD, and the break of the upward trendline suggests a bearish outlook for XAUUSD in the near term.
• Watch for Retests: If the price moves back toward the neckline (around 2397.130) without surpassing it, it could present a selling opportunity.
