GC 4H Challenge
Past challenge from 2026-03-28. See the correct answer and explanation below.
SCENARIO
Gold (GC) is at 2,400. It just hit a round number and new all-time high. The last three 4H candles show progressively longer upper wicks -- sellers are active above 2,400. Volume on the push to 2,400 was lower than the previous push to 2,385. A bearish divergence is forming on the 4H RSI.
Market Context
Gold has rallied $100 in 2 weeks without a meaningful pullback. ETF inflows are slowing. Commercial traders (COT report) are at their most short position in 3 years.
Key Levels
Long upper wicks at round numbers with decreasing volume and RSI divergence signal a potential reversal. However, shorting all-time highs is a recipe for disaster -- there is no resistance above to base a target on, and trend-following momentum can overwhelm technical signals. COT data is a warning but not a timing tool. Wait for a confirmed break below 2,385 (the last swing high becoming support) before shorting, or wait for a successful retest of 2,385 as support for a long continuation.
Prop Firm Implications
Shorting all-time highs on gold has historically been a losing strategy for FTMO traders. The trend can extend far beyond what seems reasonable.