$XAUUSD $XAUT $PAXG

Gold closed last week with a recovery above its major low of the year at $3,942. The metal, which repeatedly found support in the $3,840-$3,860 range between June 24 and July 1, continued to recover from around $3,960 last week, maintaining $3,942 and below as a zone of invalidity. Buyers were clearly very active in this region, and it's highly likely many investors entered the weekend with long positions.

But the real question remains: Is gold truly preparing for a sustained bullish reversal, or is a downward move still expected?

Looking at the four-hour chart, the market is still following a strong bearish pattern. The price clearly maintains a lower top lower bottom pattern, indicating that the trend remains bearish on the larger timeframe. The price action itself suggests that sellers are still in control.

The real question is, will the market form another lower top before falling again, or will it play another psychological game before the decline continues?

There's an interesting detail: for the past three weeks, every Monday has closed bearish. Either through gap-down openings or immediate selling pressure, Monday sessions generally ended in a bearish direction. Because of this pattern, it's expected that many traders will aggressively seek short positions at the open this Monday.

However, I don't think the market will immediately attack last week's low or the annual low of $3,942. Instead, I believe the market will first play a psychological game.

The expectation is that the first weakness after the open could be a liquidity hunt aimed at triggering stop-loss orders for anyone holding long positions above $4,000 over the weekend. As is known, $4,000 is an important psychological level; gold only managed to surpass this level near Friday's close, which naturally led many traders to hold positions expecting a continued rise over the weekend or overnight. That's precisely why these buyers are thought to be the first target at the open.

After trapping buyers over the weekend, gold is expected to recover and turn bullish on Monday. The aim of this move could be to shift retail sentiment from bearish to bullish. As traders begin to believe that 3,942 has become a strong long-term bottom, more people will start setting up swing buy positions with wider stop-loss orders.

However, personally, I don't believe these expectations will materialize. The trend in the larger timeframe is still bearish, and any bullish move is seen as merely a way to draw in fresh liquidity before the next major downward leg.

If the market breaks a near-lower peak during the week, many breakout traders will move into long positions. This breakout is also thought to be another trap. After enough buyers enter, the market is expected to continue its bearish structure and eventually fall below $3,942. If this happens, the next downside targets remain around $3,912 and ultimately $3,870.

That's the general outlook for next week.

Another important factor is that next week will be relatively calm, with a clear economic data calendar. Therefore, instead of the excessive manipulation and sharp volatility seen last Monday and Tuesday, a cleaner price movement is expected.

A closely watched technical level is $3,980. A full close below this level on a 30-minute candle would significantly strengthen downward momentum, potentially pushing gold directly towards the $3,900 region.

Overall, next week is thought to offer really good opportunities for short selling.

The plan will be simple. As long as the price remains above $3,980, a neutral stance will be maintained, focusing primarily on scalping. Large targets will not be pursued without confirmation. Aggressive swing short positions will be pursued after the market confirms a continuation of the bearish trend.

Staying disciplined, managing risk correctly, protecting capital, and waiting for the market to react rather than forcing a trade are the key principles for next week.

DYOR 🔎
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