Hey Traders,
Let's take a look at the Gold (XAU/USD) 1-hour chart using Volume Spread Analysis (VSA). The price made a strong run-up to a new high around $3,438, but the volume is telling us a story of potential weakness.
Here’s a simple breakdown of what I'm seeing.
The Trap at the Top (Signs of Weakness)
Think of the market as being moved by "smart money" (professionals) and "herd money" (the crowd).
Climax Volume: See that huge volume spike right at the peak on July 23rd? While it looks like strong buying, this is often a classic sign of a Buying Climax. This is where smart money starts selling their positions to the excited crowd who are buying at the top, fearing they'll miss out.
No Real Buyers Left: After the peak, notice how the price tried to push higher a few times but on much lower volume? This is a "No Demand" signal. It’s like a car trying to rev its engine, but it's out of gas. It shows there isn't enough buying power to push the price any higher.
Sellers Take Control: As the price started to fall from the top, look at the volume on the down bars. It got bigger. This tells us that supply (selling pressure) is now in control, and they are pushing the price down with force.
Where Are We Now?
The price has dropped and is now hovering around the $3,330 area. The volume has dried up for now, which means the market is taking a pause and deciding where to go next.
What to Watch For Next
Based on the VSA story, here are two possible scenarios:
Scenario 1 (Bearish 📉): The weakness continues. If we see the price try to rally from here but the volume is very low, it would be another major red flag. It would suggest sellers are still in control, and we could see a break below the recent low of $3,320 for another leg down.
Scenario 2 (Bullish 📈): This is a bear trap. For this to happen, we would need to see a strong sign of buying returning. For example, a sharp drop on massive volume that is quickly bought back up. This would signal that the sellers have been absorbed and smart money is starting to buy again.
Conclusion:
For now, the evidence points more towards weakness. The action at the top suggests that smart money was distributing (selling) their gold.
Key Takeaway: Be cautious of any weak-looking bounces. The sellers appear to have the upper hand until we see a clear sign of strength with high buying volume.
Let's take a look at the Gold (XAU/USD) 1-hour chart using Volume Spread Analysis (VSA). The price made a strong run-up to a new high around $3,438, but the volume is telling us a story of potential weakness.
Here’s a simple breakdown of what I'm seeing.
The Trap at the Top (Signs of Weakness)
Think of the market as being moved by "smart money" (professionals) and "herd money" (the crowd).
Climax Volume: See that huge volume spike right at the peak on July 23rd? While it looks like strong buying, this is often a classic sign of a Buying Climax. This is where smart money starts selling their positions to the excited crowd who are buying at the top, fearing they'll miss out.
No Real Buyers Left: After the peak, notice how the price tried to push higher a few times but on much lower volume? This is a "No Demand" signal. It’s like a car trying to rev its engine, but it's out of gas. It shows there isn't enough buying power to push the price any higher.
Sellers Take Control: As the price started to fall from the top, look at the volume on the down bars. It got bigger. This tells us that supply (selling pressure) is now in control, and they are pushing the price down with force.
Where Are We Now?
The price has dropped and is now hovering around the $3,330 area. The volume has dried up for now, which means the market is taking a pause and deciding where to go next.
What to Watch For Next
Based on the VSA story, here are two possible scenarios:
Scenario 1 (Bearish 📉): The weakness continues. If we see the price try to rally from here but the volume is very low, it would be another major red flag. It would suggest sellers are still in control, and we could see a break below the recent low of $3,320 for another leg down.
Scenario 2 (Bullish 📈): This is a bear trap. For this to happen, we would need to see a strong sign of buying returning. For example, a sharp drop on massive volume that is quickly bought back up. This would signal that the sellers have been absorbed and smart money is starting to buy again.
Conclusion:
For now, the evidence points more towards weakness. The action at the top suggests that smart money was distributing (selling) their gold.
Key Takeaway: Be cautious of any weak-looking bounces. The sellers appear to have the upper hand until we see a clear sign of strength with high buying volume.
This is not financial advice. This is just my interpretation of the chart using VSA. Always do your own research and manage your risk. Good luck trading!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.