How to Trade the "Compression" Pattern on Gold (4H Chart) 📉➡️📈
Right now, XAUUSD is giving us a textbook lesson in market structure. After a deep liquidity sweep to $4,880, price has made a strong recovery and is now compressing.
In trading, compression always leads to expansion. We are waiting for the trigger.
Here’s how I break it down (and how you can trade it too):
1- The Context (The Stop Hunt)
Price dropped sharply to $4,880, taking out all the long stops. Immediately, buyers stepped in for a V-shaped recovery. This tells us that liquidity was grabbed and the market is looking to move up.
2- The Squeeze (The Calm)
We are now coiling just under the $5,040 resistance. The MACD is curling up, suggesting momentum is preparing to shift, but the low volume tells us no one has committed yet.
3- The Trigger (The Storm)
· BULLISH: A clean 4H close above $5,040 with rising volume. Targets: $5,080, then $5,120.
· BEARISH: Failure at $5,040 and a loss of the $5,000 psychological level. Targets: $4,960, then $4,920.
💡 My Take:
This setup favors the bulls as long as $5,000 holds. We need to see volume back into the market to validate the breakout.
💬 New traders: Which level are you watching?
💬 Experienced traders: Am I missing a key level?
Save this post for your session tonight so you don't miss the move!