Gold (XAU/USD) enters the July 21 Pre-UK session with strong bullish momentum after an impressive recovery from the recent support zone around 4000. Based on the M15 chart, buyers remain firmly in control as price continues to trade near 4048, maintaining its position above key intraday support levels. The recent bullish breakout has shifted short-term sentiment in favor of the bulls, while momentum indicators suggest that further upside movement remains possible if buyers can sustain the current pace.
During the previous trading session, gold experienced steady accumulation as investors responded positively to safe-haven demand and technical buying pressure. The market successfully broke above several intraday resistance levels and formed a sequence of higher highs and higher lows, which is one of the strongest bullish signals visible on lower timeframes.
As the European market prepares to open, traders will closely monitor whether buyers can extend the current rally toward higher resistance zones or whether profit-taking activity emerges after the recent advance. The next few hours are expected to play a critical role in determining whether the current bullish trend continues or enters a consolidation phase.
Current Market Structure
The M15 chart clearly shows a bullish market structure. Following a period of consolidation around the 4000 area, buyers regained control and pushed prices steadily higher. The breakout above the 4030 region confirmed the end of the previous consolidation phase and opened the path toward the current trading zone near 4048.
The formation of higher lows remains particularly important. Each retracement has been met with fresh buying interest, suggesting that market participants are willing to accumulate positions on dips. This behavior often occurs during healthy bullish trends and increases the probability of further upside continuation.
Price is currently approaching a key resistance region that could determine the next major directional move. A successful breakout above this resistance would strengthen the bullish outlook considerably, while rejection could trigger short-term profit-taking.
RSI Momentum Analysis
The Relative Strength Index (RSI 14) is currently trading around 72.67, indicating strong bullish momentum. However, the indicator has entered overbought territory, which suggests that buyers have dominated recent price action.
An overbought RSI does not automatically mean that the market must reverse. In strong bullish trends, RSI can remain above 70 for extended periods while price continues to advance. Nevertheless, traders should remain alert because overbought conditions often increase the probability of temporary pullbacks and consolidation phases.
If RSI remains above 70 during the Pre-UK session, bullish momentum is likely to remain intact. A decline back below 70 could signal the beginning of a corrective retracement before the next upward move develops.
Support Levels to Watch
- Immediate Support: 4040 – 4035
- Secondary Support: 4025 – 4020
- Major Support: 4005 – 4000
The 4040–4035 area represents the first line of defense for buyers. Maintaining price above this zone would preserve the current bullish structure and keep upward targets active.
If a deeper correction occurs, the next significant support area appears around 4025–4020. This region previously acted as resistance before the breakout and may now serve as support according to the principle of role reversal.
The 4005–4000 zone remains the most important long-term support level. A breakdown below this area would significantly weaken the bullish outlook and potentially shift market sentiment back toward the bearish side.
Resistance Levels to Watch
- Immediate Resistance: 4050 – 4055
- Secondary Resistance: 4065 – 4075
- Major Resistance: 4085 – 4100
The first challenge for buyers is the 4050–4055 resistance zone. Price is currently testing this area, making it one of the most important levels during the upcoming session.
A successful breakout above 4055 could trigger additional momentum buying and potentially drive gold toward the 4065–4075 region. Beyond that, the psychologically important 4100 level becomes the next major target.
The 4085–4100 area may attract significant selling pressure because many traders are likely to secure profits near these levels. Therefore, price behavior around this region will be critical for determining the medium-term outlook.
Trend Analysis
The short-term trend remains firmly bullish. The market has established a clear sequence of higher highs and higher lows while maintaining strong momentum above key support levels.
Recent price action suggests that buyers continue to dominate market activity. Every attempt by sellers to push prices lower has been met with renewed demand, indicating confidence among bullish participants.
As long as price remains above 4035, the bullish trend structure remains intact. Traders should continue monitoring whether the market can sustain its momentum through the European opening hours.
Bullish Scenario
The preferred scenario for the Pre-UK session remains bullish. If buyers successfully maintain price above 4040 and break through 4055, further upside movement becomes increasingly likely.
Under this scenario, the market could target:
- Target 1: 4065
- Target 2: 4075
- Target 3: 4085–4100
Several technical factors support the bullish outlook:
- Strong upward momentum.
- RSI remains above 70.
- Higher highs and higher lows continue forming.
- Price remains above recent breakout levels.
- Buyers continue defending support zones.
If market sentiment remains positive during the European session, buyers may attempt to challenge higher resistance levels before the US session begins.
Bearish Scenario
Despite the bullish momentum, traders should not ignore potential downside risks. Markets rarely move in a straight line, and the current overbought RSI reading suggests that a correction remains possible.
A failure to break above 4055 could trigger profit-taking activity. If sellers manage to push price below 4040, a retracement toward 4025–4020 may develop.
A deeper decline below 4020 would expose the major support zone near 4000 and significantly weaken the bullish outlook.
The bearish scenario would become stronger if:
- RSI falls below 70.
- Price closes below 4040.
- Strong resistance rejection occurs near 4055.
- Risk appetite improves significantly in broader markets.
Pre-UK Session Expectations
The upcoming UK session is expected to be highly active as European traders respond to the recent bullish breakout. Increased participation typically results in higher volatility and stronger directional moves.
The most likely outcome is continued consolidation above support followed by another attempt to break the 4055 resistance area. If buyers succeed, momentum could accelerate rapidly toward higher targets.
However, traders should remain disciplined and avoid chasing price excessively near resistance. Waiting for confirmation often provides better risk-to-reward opportunities than entering positions during periods of elevated volatility.
Key Levels Summary
- Current Price Zone: 4048
- Bullish Trigger: Break above 4055
- Bearish Trigger: Break below 4040
- Upside Target 1: 4065
- Upside Target 2: 4075
- Upside Target 3: 4085–4100
- Downside Target 1: 4025
- Downside Target 2: 4020
- Downside Target 3: 4000
Forecast Summary
The technical outlook for XAU/USD ahead of the July 21 Pre-UK session remains bullish. Price is holding above key support levels, momentum indicators favor buyers, and the overall market structure continues to show higher highs and higher lows.
While overbought RSI conditions suggest that temporary pullbacks remain possible, the broader technical picture continues to favor additional upside as long as price remains above the 4040 support zone. A breakout above 4055 could open the path toward 4065, 4075, and potentially the major resistance area near 4100.
Overall, buyers currently maintain the advantage, and the Pre-UK session is expected to remain constructive unless significant selling pressure emerges below key support levels.