How to pick the 'blow off top' in gold - Week 16 | Technical Analysis by Jasper Lawler

Technical Analysis: Week 16, 2025

(Gold | EUR/USD | AUD/USD)

Your weekly market edge, from WeTrade x Trading Writers.

Weekly thoughts

Gold's trend is still up, but signs of a potential short-term top are emerging. The price has gone parabolic, bullish sentiment is peaking, and everyone's talking about buying gold and selling the dollar, classic ingredients for a blow-off top.

A blow-off top often marks the end of a strong rally, driven by euphoric buying and FOMO. While this may not be gold's final peak, it could lead to a tradable correction. It's the point where late buyers push price higher, only to get trapped as the market turns.

It may not be the top—just a tradable correction.

The trend is our friend… until it ends. Selling in an uptrend rarely makes sense. Momentum often carries further than we expect.

Gold's now just shy of $3400/oz. Could you have imagined that three weeks ago when it was under $3000？ Or $2600 at the start of the year？ Probably not. It's been a rocket.

And after this rapid run-up, traders shift their expectations. That $800 move doesn't seem so wild anymore. Now, $4000 forecasts are doing the rounds.

Sure, gold can go higher, that's the risk in shorting. But let's not guess the top. You might think $3500 is logical, but the same could've been said at $3000.

We need the market to confirm that gold's party is getting too crowded.

We've broken down this setup into 3 parts, youll remember these from Week 13

The Logic Behind the Trade

Were not calling a top in gold, just watching for signs that one might be forming. Here's the 3-part framework:

1. The Setup

Gold has been trading more than 3 standard deviations above its mean for three weeks straight. Bollinger bands show it clearly. Statistically, that's extreme. Price is stretched—like a rubber band pulled too tight. When everyone's long, the risk is there's no one left to buy.

2. The Signal

We want a down day—a lower close despite good news (e.g., weak US data, geopolitics). That tells us buyers are losing conviction, even when the environment should support higher prices. It's a sign the trade is crowded and the market is tired.

3. The Trigger

If that down day is followed by a break below its low, we've got our entry. That's our confirmation that momentum has shifted and a deeper pullback may be underway. Until then, we wait—no guessing.

If you're questioning the logic, remember the setup we flagged in DAX 40 in Week 12. It was trading at 23,000—we said it looked overbought and due a correction to its 30-week MA near 21,000. Trump helped! It hit target in a week, and eventually bottomed at 19,000.

Setups & signals

We scan hundreds of charts weekly and share 3 top setups:

Long term chart (weekly)

Trend: Up

Phase: Blow off top？

Resistance = 3500

Support = 2600

Price action: The chart shows the last several occasions when gold got this ‘stretched’ on the upside going back five years. There is usually at least a consolidation that follows, and occasionally it sets up a larger correction.

View: Bearish (after setup)

Medium term chart (daily)

Trend: Up

Phase: Getting parabolic

Resistance = 3400

Support = 3000

Price action: Following a dip under $3000 and its 30-day moving average, gold thundered higher to hit multiple record highs last week. There is bearish divergence with higher highs in price being matched with equal highs on the RSI.

Long term chart (weekly)

Trend: Up

Phase: Range breakout

Resistance = 1.2250

Support = 1.12

Price action: The price has continued to surge above its former range high, taking it further into a new uptrend. The 78.6% Fibonacci retracement of the 2021-22 decline could offer next resistance before a full 100% retracement.

View: Bearish while below 10.000

Medium term chart (daily)

Trend: Up

Phase: 3rd wave of uptrend

Resistance = 1.1650

Support = 1.14

Price action: The price is in a clear uptrend with clear blue skies above on the daily chart, trading at 3 year highs. The price looks over-extended vs the 30-day SMA and there is bearish divergence on the RSI.

AUD/USD

Long term chart (weekly)

Trend: Down

Phase: Rebound/Reversal

Resistance = 0.69

Support = 0.60

Price action: Interesting because Aussie still in a long term downtrend vs the dollar. So if the dollar rebounds - its in line with the trend in AUD/USD. However, the false breakdown under 0.62 and huge 2 week reversal suggests possible long term bottom.

View: Bearish, neutral on break over 0.64

Medium term chart (daily)

Trend: Sideways

Phase: Possible breakout

Resistance = 0.65

Support = 0.64

Price action: The price closed higher 7 days in a row in a 400 pip rally. Possible breakout but price looks exhausted and could result in a 'fakeout' and possible short from around 0.64 down to 0.62 or lower to retest prior low near 0.60.

But - as always - that's just how the team and I are seeing things, what do you think？

Share your ideas with us - OR - send us a request!

Cheers!