Gold (XAU/USD) Multi-Timeframe Technical
Strategy
Gold is highly liquid and volatile. A top-down approach is essential: use higher-timeframe charts (4H, 1H or
daily) to determine the trend or bias, then time entries on shorter charts (15M, 5M, 1M). In practice, traders
align with the dominant trend on H1/D1 (or 4H) and execute on M5–M1 reversals 1 . For example, if the
4H/1H structure shows higher highs/lows (bullish), we look only for buys on lower timeframes; if structure is
bearish, we look only for shorts 2 3 . Always trade in high-liquidity “kill zones” (London/New York
sessions) and avoid low-volume periods (Asian session) 2 4 .
Key Technical Concepts
• Key Levels (Liquidity Zones): Identify untouched support/resistance zones where stops cluster –
e.g. previous-day high/low, weekly pivots, London/NY session highs/lows 5 6 . These levels often
attract liquidity sweeps. Mark these untapped levels on your 4H/1H chart; when price revisits them
on an intraday chart, watch for a reaction (breakout or rejection) 5 6 .
• Liquidity Sweeps: Gold often “hunts” stops beyond obvious levels. A classic pattern is a liquidity
sweep: price briefly spikes past a high or low (stop-run) then reverses. Traders wait for this sweep
and then look for a clear breakout or failure as confirmation of the next move 7 . For example, if
price briefly pierces yesterday’s high and then rallies sharply, that sweep signals fuel for a
continuation (or a fake-out). The sweep itself often creates a strong impulse (displacement), which
usually leaves an imbalance (see next point).
• Fair Value Gaps (FVG) / Imbalance Zones: An impulsive move away from a level often creates a price
gap or imbalance on the chart (no overlapping candles). These Fair Value Gaps indicate where “smart
money” entered. Price tends to return to fill or test these FVG zones before continuing 8 9 . For
instance, a sudden 1H spike up will leave a green FVG below; on a 5M chart we can use the mid-point
of that gap as an entry area. In short, FVGs act like hidden support/resistance. Smart traders mark
any FVGs on the 1H/4H chart and then watch for 5M/1M retests as entry triggers 8 9 .
• Order Blocks (Supply/Demand Zones): These are price ranges where a strong reversal began (often
the last bearish candle in a rally or vice versa). Order blocks align with institutional buying/selling, so
they also often act as reliable S/R zones. If a price swing starts at a 4H/1H order block, that block can
become a target or entry zone on lower timeframes. In practice, order blocks often coincide with
previous session highs/lows or FVG edges.
• Market Structure Shifts: Keep track of swings and structure on your chart. A Break of Structure
(BOS) (new high in uptrend, new low in downtrend) confirms the trend is intact 3 . A Change of
Character (ChoCh) – e.g. price breaching a key swing low in an uptrend – can signal a potential
reversal 10 . In other words, use structure: only enter long after an uptrend shows a bullish BOS, and
enter short after a bearish BOS. If price makes a ChoCh, be cautious or reverse bias.
1
• Trendlines/Moving Averages: Though not always exact, major trendlines or moving averages on
4H/1H often give additional support/resistance. For example, a rising 1H trendline or the 50EMA
aligning with a session low can strengthen that zone. Use them as tiebreakers when levels coincide.
In summary, gold tends to respect session highs/lows, FVG/imbalance zones, order blocks, trend lines,
and structure breaks. Mark these on your charts and watch for price to react there.
Entry Signals on Lower Timeframes
Once the higher-timeframe bias and key levels are set, zoom into the 15M–1M charts for execution after
confirmation:
• Liquidity Sweep + Breakout/Failure: As noted, wait for price to sweep a marked level (e.g. above a
high) and then form a clear breakout or rejection. Then drop to a lower TF. If the breakout continues
(displacement), a small pullback or consolidated 5M candle will form an FVG. Enter once a confirming
candle or pattern appears in that gap.
• FVG Retest Triggers: Common entry methods on the retest include (see example on 5M): entering
at the 50% point of the FVG, or on the third retracement candle after the impulse, or at the low/
high of that third candle 11 . Always place the stop just beyond the extreme of the original sweep (or
beyond the first candle of the impulse) 12 . For example, if price blasts 20 ticks above the Asian high
then pauses, draw the FVG from that impulse. You might go long on a 5M green candle that closes in
the middle of the gap, with stop a few ticks below the sweep level 11 7 .
• Break of Structure (LTF Confirmation): On 15M or 5M charts, a BOS in the direction of bias is a
strong entry signal. For instance, after price breaks and sweeps a high, it may then break the
previous minor swing on 15M – this BOS suggests momentum. You can enter on the retest of that
broken level or at the FVG overlap 7 3 .
• Candlestick Patterns: Look for clean candlestick signals on the retest: e.g. engulfing or pin bars that
reject the FVG. These act as additional confirmation of a good entry.
• Example: Suppose 4H/1H are bullish. Price nears yesterday’s high (liquidity zone) during the London
session. It spikes up (sweeping stops), closes a big green 15M candle (displacement), leaving an FVG
on 5M. As price pulls back, you wait on the 5M chart for price to enter that FVG. If a 5M bullish
engulfing candle forms around mid-gap, you buy with stop just under the Asian high. This aligns H1
bias, shows a 5M BOS, and targets the next obstacle (e.g. weekly pivot).
2
Strategy Flow/Checklist
A structured checklist helps ensure consistency. The table below outlines a repeatable SMC-based process
for a gold scalp:
1. Mark Key Levels: On the 4H/1H chart, highlight untapped levels – e.g. previous day’s high/low,
London/New York high/low swings, weekly pivots, major trendlines 5 6 .
2. Wait for Liquidity Sweep: On a lower chart, let price reach one of these levels. Watch for a stop-run
beyond it. Confirm whether the sweep leads to a sustained breakout (impulse) or a failed break
(rejection) 7 .
3. Confirm Displacement: Once a strong move occurs (e.g. a big candle away from the level), verify it
left an FVG or imbalance 8 . A clean, one-directional impulse means “smart money” likely entered.
4. Enter on FVG Retest: Drop to M5–M1. Draw the FVG from the impulse. Place entries in this zone
(often at ~50% of the gap or on the 3rd pullback candle) with stop just beyond the sweep wick or
prior swing 11 12 .
5. Trade in Volatile Sessions: Only take entries during high-volume periods (London/New York). Avoid
the Asian session and illiquid hours 2 .
6. Exit at Next Liquidity Pool: Set profit targets at the next logical zone: the opposing swing high/low,
the nearest FVG, or a major order block 13 . Move stops to breakeven or trail as price moves in your
favor.
This flow (Sweep → Impulse → FVG → Entry) formalizes the strategy. Refer to it before each trade to keep
decisions systematic.
Risk Management (Scalping)
Scalping gold requires strict risk control. Traders typically risk only ~1–2% of capital per trade and always
use a stop-loss 14 . Size your position so that your stop-loss distance corresponds to this risk. For example,
3
if risking 1% ($100) and your stop is 10 tics away, trade 10 micro-lots ($10 per tic). Avoid excessive leverage –
even though stops are small, gold can gap or spike.
Always place a stop-loss just beyond a technical invalidation (beyond the sweep wick or swing point).
Likewise set a take-profit at a realistic level – often a 1:1 or 1:2 risk:reward is used for scalps 15 . For
instance, if the stop is 10 tics, aim for a 10–20 tic move (next S/R or FVG). Use OCO orders or alerts to
manage the trade automatically.
In summary, define your risk before each scalp. Monitor spreads (especially around news) and avoid
trading right before events. Keep scalp trades brief (2–3 hours as specified) – don’t let emotion extend
trades. As Pepperstone advises, “always use stop-loss orders to limit potential losses,” and adjust position size so
a single loss won’t significantly impact capital 14 16 .
By combining higher-timeframe bias with these entry triggers and disciplined risk rules, you create a
repeatable gold scalping model that relies on price behavior (liquidity, imbalance, structure) rather than
unpredictable news. This structured approach – marking levels, waiting for sweeps, entering FVG retests,
and scaling out at the next logical zones – helps ensure consistency in fast-moving XAU/USD markets.
Sources: Strategy concepts drawn from smart-money trading frameworks and gold analyses 5 8 9 3
14 , which emphasize multi-timeframe confluence, liquidity zones, and precise entry/stop placement.
1 2 4 5 6 7 8 11 12 13 Complete Step-by-Step Guide to Day Trading Gold (XAU/USD) with...
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3 10 What Is a Break of Structure and How Can You Trade It? | Market Pulse
https://fxopen.com/blog/en/what-is-a-break-of-structure-and-how-can-you-trade-it/
9 Fair Value Gap (FVG) Trading Guide - Alchemy Markets
https://alchemymarkets.com/education/strategies/fair-value-gap/
14 15 16 How To Manage Risk In Scalping | Pepperstone
https://pepperstone.com/en/learn-to-trade/trading-guides/scalping-trading-risk-management/
