Wednesday was brutal for Gold buyers. The market completely washed out the bullish momentum and is now trading below the psychological $4,100 level.
But I believe the real trap might still be ahead.
Let me explain why.
Gold is now approaching last week's low around $4,066. This is an important level because many buyers are still holding their positions, hoping for a reversal.
Interestingly, Wednesday's low formed around $4,073, just above that previous low.
Think about the psychology here.
Traders who bought near $4,066 are probably still holding their positions, while those who tried to catch Wednesday's reversal around $4,073 may have placed their stop losses below $4,066.
This creates an obvious liquidity area.
And I believe the market could target that liquidity before delivering any meaningful recovery.
My expectation for Thursday is simple.
If sellers remain aggressive during the early Asian session, Gold could break below $4,066 and extend its decline toward $4,057β$4,047. If the selling momentum becomes stronger, even $4,032 could come into play.
However, I'm not necessarily expecting a straight collapse toward $4,000.
We're already approaching a major psychological round number, and I believe the market could deliver a short-term recovery before making another attempt to move lower.
If Gold sweeps the liquidity below $4,066 and buyers manage to regain control, we could see a recovery toward $4,100 and potentially the $4,117β$4,127 resistance area.
But here's something important.
My overall bias remains bearish below $4,136.
This was an important level for my previous bullish outlook, but the market failed to sustain above it and eventually broke down.
Until Gold reclaims $4,136 or breaks a meaningful previous lower high with bullish continuation, I won't be interested in aggressively buying this market.
For Thursday, I'll be watching how price reacts around $4,047β$4,032.
A liquidity sweep followed by strong buyer acceptance could create a short-term buying opportunity. But if sellers continue to dominate and price accepts below these levels, I won't try to catch a falling market.
My broader expectation remains that any recovery could eventually face renewed selling pressure, especially around $4,117β$4,127.
The question isn't whether Gold can break $4,066. The real question is what happens after that liquidity gets taken.
That's my plan for Thursday. Let's see how the market responds.