FX.co ★ SidraBano | XAU/USD, GOLD

XAU/USD Analysis Using SMC Concept Understanding the Chart and SMC Framework The chart displays the XAU/USD (Gold vs. US Dollar) on a 1-hour timeframe, analyzed using the Smart Money Concept (SMC). SMC focuses on market structure, liquidity, and order blocks to identify high-probability trading setups. Key elements include Break of Structure (BOS), Change of Character (CHOCH), and areas of liquidity like Premium (PDH) and Discount (PDL) zones. The chart shows price levels, marked zones (PDH at 3,350.000, PDL at 3,275.000), and volume spikes, indicating significant market activity. Market Structure Analysis The chart reveals a clear market structure. Initially, price breaks above a previous high (BOS) around April 23, signaling a bullish trend. However, a CHOCH occurs as price fails to sustain higher highs and drops below a key swing low, indicating a potential trend reversal. Another BOS to the upside follows, but the recent CHOCH near the PDH (3,350.000) suggests bearish momentum as price rejects this premium zone and falls toward equilibrium (3,300.000). This indicates a shift from bullish to bearish sentiment. Liquidity and Key Levels SMC emphasizes liquidity zones where smart money (institutional traders) often target stop-loss orders. The Premium zone (PDH at 3,350.000) acts as a resistance where sell orders accumulate, as seen with the rejection at 3,314.380 (marked "SELL"). The Discount zone (PDL at 3,275.000) is a support area where buy orders cluster, as noted by the "BUY" at 3,313.640 earlier. The equilibrium level (3,300.000) serves as a pivot, with price currently testing this area after the recent drop, suggesting potential consolidation or a directional move. Trade Setup: Bearish Scenario Given the recent CHOCH and rejection at PDH, a bearish setup emerges. Entry can be placed after a confirmed break below the equilibrium (3,300.000), targeting the PDL at 3,275.000, where liquidity for buy orders exists. Stop-loss should be set above the recent swing high at 3,314.380 to manage risk. This setup leverages the bearish momentum and targets liquidity below, aligning with SMC principles of following smart money flow after a trend shift. Risk Management and Conclusion Risk management is crucial in SMC trading. Using a 1:2 risk-to-reward ratio, the trade from 3,300.000 to 3,275.000 (25 points) with a stop-loss at 3,314.380 (14.38 points) offers a favorable setup. Monitor volume and price action at key levels for confirmation. In conclusion, the SMC analysis on XAU/USD highlights a bearish opportunity, driven by structural shifts and liquidity targeting, with clear entry, exit, and risk parameters for disciplined execution.