After the recent U.S. election, gold prices dropped by 3.87%, raising concerns among investors. This drop aligns with trends seen in election years, where political shifts influence the market. With a strong dollar and changing interest rate policies, gold faces new challenges. However, in this article, we will analyze the reasons behind this decline, look at current chart signals, and provide strategic insights for planning future market moves.
Gold Technical Analysis
Gold is currently in a downtrend, so we’ll be focusing solely on short orders. It’s essential to follow the trend—”Trend is the King,” and fighting against it can lead to losses. The 2670-2680 range provides a solid setup for short positions, with several confluences of short signals in this area:
- Order Block: The 2670-2680 range is marked as an order block, indicating a potential reversal point.
- EMA Levels: The 5-minute chart shows both the 150 and 200 EMAs around 2670-2680, adding weight to this level.
- Resistance Area: This range is a strong resistance zone, reinforcing the case for short orders.
With these technical indicators aligning, the 2670-2680 level offers an ideal entry for short positions in line with the current downtrend.
Extra Confluence in Shorting Gold
Although the current price hasn’t yet reached the 2670 level, we can anticipate and plan for potential future movements. Here are additional confluences that strengthen our short setup:
- Power of 3 (PO3): The three boxes illustrated in the image represent the PO3 pattern. Box Number 2 signifies a liquidity grab and an order block. Our ideal entry is during the transition between Box 2 and Box 3—after Box 2 has occurred but before Box 3 plays out.
- Bearish Engulfing Confirmation: If Box 2 forms a bearish engulfing pattern, this further confirms our short bias, adding confidence to the setup.
These additional confluences have yet to materialize, so we’ll carefully observe price action around the 2670-2680 level to confirm our entry.
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