- $XAUUSD has broken out of a rising wedge, signaling a bearish trend reversal.
- The recent FED rate cut was already priced in, leading to late buyer losses.
- A 1500 pips bearish rally is expected as $XAUUSD tests new support levels.
The gold market ($XAUUSD) is showing signs of a potential reversal. After a steady rise, the market has hit a resistance point, and a correction seems imminent. The recent Federal Reserve (FED) rate cut, which had been largely priced into the market, has left many late buyers trapped. This situation has created the conditions for a downside movement in the coming days.
Rising Wedge Breakdown
$XAUUSD formed a rising wedge pattern over the past weeks, which typically signals a reversal when the price breaks below the wedge’s lower boundary. The breakout has already occurred, with the price showing signs of weakening.
This breakout indicates that a bearish rally is likely in the near term. The market’s inability to maintain momentum after the recent FED rate cut is contributing to the growing bearish sentiment.
Federal Reserve Chair Jerome Powell confirmed a 0.25% rate cut in an announcement, stating, “Today, the Federal Open Market Committee decided to lower our policy interest rate by 1/4 percentage point.”
While analysts initially reacted positively, viewing the rate cut as a way to stimulate economic growth, it is clear that the price of gold has already priced in this decision. The rate cut signals confidence in the U.S. economy’s future but may have set the stage for a bearish correction in the gold market.
Potential for 1500 Pips Downside
With the breakdown of the rising wedge, analysts expect a significant drop in $XAUUSD. The target for this bearish movement is estimated at 1500 pips, a notable shift for traders who have been long on gold. This expected movement would lower the price, providing an opportunity for traders to capitalize on the downside.
Although the market has seen bullish movement recently, the upside momentum has reached its peak. As the market continues to correct, traders should watch for signs of further downward movement. The price could test lower support levels in the coming days, with many anticipating a more prolonged bearish trend as the market recalibrates.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
