In the lead-up to a major Federal Reserve decision, markets often display volatile behavior designed to shake out weak hands. Yesterday, Gold futures gave us a textbook example of this phenomenon around the psychological $4,200 level.
Gold technical analysis: Were the bears just trapped? Seems so!
In today's gold technical analysis video, I take a close look at the Gold futures 1-Hour chart, focusing on the price action since the contract rollover on November 26, 2025. What we see is a classic consolidation phase that resolved in a deceptive move, trapping bears before bulls regained the upper hand.
The Setup: A Textbook "Shakeout" at $4,200
Following the contract rollover, gold entered a period of consolidation. Yesterday, this range was broken with a sharp, temporary drop below the significant $4,200 round number.
This move pushed price to a low of $4,197.80. Crucially, this level was near the previous lows from December 2nd and December 4th, an area rich with stop-loss orders from traders who were long. This action bears all the hallmarks of a "stop hunt" or "shakeout"—a move designed to trigger sell orders to provide liquidity for larger players to buy.
The Reversal: Bulls Reclaim the Value Area
As I demonstrate in the video below, the bearish breakdown was short-lived. Bulls stepped in aggressively, buying the dip and driving the price back up.
The key confirmation came when price crossed back above the $4,214 level, reclaiming the previous consolidation's Value Area. This decisive move signaled that the brief dip below $4,200 was likely a trap and that control had shifted back to the buyers. The rally even extended to test the Volume Profile's Point of Control (POC), further cementing the bullish stance.
Watch the full 1-Hour chart breakdown and identify the key levels in the video above.
The Macro Catalyst: FOMC and the Path for 2026
This technical recovery is happening against the backdrop of a critical Federal Reserve meeting tomorrow, Wednesday. The market consensus is currently leaning towards a quarter-point rate cut.
Traders are looking beyond just this week's decision. The market is eager for guidance on the Fed's dot plot and economic projections for the end of 2026. Any changes in wording regarding the pace of future easing—or hints about who might succeed Jerome Powell as Fed Chair, with Kevin Hassett being a leading candidate—could trigger significant volatility.
These factors will determine the broader "risk-on" or "risk-off" sentiment, which will likely dictate the next major directional move for gold.
Key Takeaways & Next Steps
The $4,200 zone held: The fake-out below this level has created a strong foundation of support.
Bulls are in control: Reclaiming the $4,214 value area invalidates the immediate bearish case.
Fed is the trigger: Expect chopped price action until the FOMC statement releases tomorrow.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Trading futures and commodities involves substantial risk of loss and is not suitable for all investors.
