Gold Price Analysis: Bears back in the drivers seat, 1:3 R/R setup in place

Gold prices are weaker as the week goes by and have fallen into the bear's liar. 

For fundamentals, see here.

Gold and DXY technical analysis

• DXY Price Analysis: EM-FX/DXY could be a tell-tale sign of things to come

In the above analysis, there was a bullish case in the making considering a number of intermarket implications and price analysis for which is starting to come to fruition.

As for gold, in a previous analysis, it was stressed the dollar was in the driver's seat and to monitor for a 5th wave to the upside:

The above is a prior DXY analysis which has started to now play out, as illustrated in the live chart showing the current price below:

So, now with the dollar moving in the right direction, we can focus back on gold prices.

Gold was testing higher prior to the drop, a price action that was expected as illustrated below:

The daily chart above was showing clear resistance.

The price was trapped between there and support and it was explained that a break of either will be significant.

The best place to monitor for a breakout is down on the lower time frame charts and there was this analysis prior to the recent drop:

It was explained that a break below the 4-hour support will open the potential for a short.

Following the events of the US session, the price is now, as expected, in a position where a sell limit can be placed to take advantage of a discount as follows:

As shown in the above 4-hour chart, the price has followed the above analysis to a T.

The sell limit can be strategically placed at the structure for a discount with a stop loss protecting the position, if the sell limit is triggered, above the highs. 

The target is established just ahead of lower structure for a 1:3 risk to reward.