Trade Radar: Three Divergence Plays

Key Points

• Gold has pulled back from its $4,425 high after two bear RSI divergences formed at the top of the 15 minute rally. A bearish change of character near $4,400 confirms that short term momentum has shifted. The $4,390 to $4,410 supply zone is where sellers could step back in, with targets at $4,325 and $4,300 (the strong low). Wednesday’s CPI is the fundamental catalyst.
• The DAX is trading at 26,368 after rallying from 26,100 to 26,440, but two bear RSI divergences warn that the push is losing steam. The weak high at 26,440 has already been rejected, and equal lows near 26,320 present a liquidity target below. A pullback toward the 26,280 strong low is the base case if the divergence plays out.
• Bitcoin has sold off from $65,400 to $63,925, breaking multiple structural levels on the way down. A bearish change of character and break of structure confirm selling pressure. A fresh bull RSI divergence at the lows adds a note of caution, but the weak low at $63,600 remains the primary downside target on any bounce back into supply.

Trade 1: Gold Short from Supply

Chart: XAU/USD, 15min timeframe (TradingView, SMC)

Gold has been the breakout story of the week on the daily chart, but the 15 minute timeframe tells a more cautious story. Two bear RSI divergences have formed at the highs, meaning price pushed to $4,425 while momentum was fading underneath. The most recent high is marked as a weak high, which in structural terms means it is expected to be revisited but typically sees a pullback first.

The bearish change of character near $4,400 confirms that sellers have taken short term control. Price has already retraced to $4,380, sitting just below the $4,390 to $4,410 supply zone where the structure broke. A retest of this supply area that fails to hold could see price move toward $4,325 where demand was established during the rally, and then the $4,300 strong low where buyers are most likely to defend.

The strong low at $4,300 is significant because it represents the structural floor that must hold for the broader bullish trend to remain intact. A break below $4,300 would shift the picture from a routine pullback to something more concerning. Invalidation sits above $4,425, where a break would mean the weak high has been taken and the rally has resumed.

Wednesday’s CPI at 12:30 UTC is the key fundamental input. A hot print could accelerate the pullback as rate expectations shift, while a soft print could invalidate the short entirely and send gold toward the $4,500 area.

Trade 2: DAX (GER40) Short from Rejected Highs

Chart: DAX (GER40), 15min timeframe (TradingView, SMC)

The DAX has rallied strongly from the 26,100 demand zone through multiple break of structure signals to tag 26,440. The move has been broad and sustained, but the 15 minute RSI is sending a clear warning. Two bear divergences have formed at the highs, with each new price high accompanied by a lower RSI high.

The weak high at 26,440 was rejected on the first test, and a change of character near 26,400 signals that the short term bias has shifted. Price is currently sitting at 26,368, just above a cluster of equal lows near 26,320. Equal lows are significant because stop losses tend to accumulate at those levels, making them a natural liquidity target on any move lower.

The setup looks for a short from the 26,370 to 26,400 supply area, targeting the equal lows at 26,300 first and the strong low at 26,280 second. The strong low is the structural floor that must hold for the broader rally to remain valid. Invalidation sits above 26,440, where a break of the weak high would signal that the uptrend has resumed.

There is no major European data this week, but the DAX is sensitive to US CPI on Wednesday and broader risk sentiment. A softer inflation print would likely support equities and invalidate the short, while a hot reading could provide the catalyst for the divergence to play out.

Trade 3: Bitcoin Short into the Weak Low

Chart: BTC/USD, 15min timeframe (TradingView, SMC)

Bitcoin has had a volatile few sessions, rallying from $64,400 to tag $65,400 before selling off sharply to $63,925. The 15 minute chart shows the damage clearly. Multiple changes of character and breaks of structure have confirmed a bearish shift, with the most recent structural break pushing price below $64,000.

The supply zone between $64,800 and $65,000 is where the sell off accelerated, and the strong high at $65,400 represents the ceiling that is expected to hold for now. On the downside, the weak low near $63,600 is the primary target because it represents the nearest unprotected low with liquidity sitting beneath it.

There is one cautionary signal worth noting. A fresh bull RSI divergence is forming at the lows, with price printing lower lows while RSI prints higher lows. This suggests that selling pressure may be fading and a temporary bounce could materialise before the weak low is taken. The setup accounts for this by placing the entry zone at $64,200 to $64,400, the supply retest area after the structural break. The trade only triggers on a bounce back into supply rather than at current levels.

Invalidation sits above $64,800, where a break back into the upper supply zone would suggest the bearish structure has failed. Bitcoin remains correlated with risk assets this week, so Wednesday’s US CPI could be the swing factor for all three setups on this radar.

Key Events This Week

Tuesday 11 August: RBA Cash Rate Decision (04:30 UTC, expected hold at 4.35%)

Wednesday 12 August: US Core CPI m/m (12:30 UTC, forecast 0.2%) | CPI y/y (12:30 UTC, forecast 3.4%)

Thursday 13 August: UK GDP m/m (06:00 UTC, forecast −0.1%) | US Core PPI m/m (12:30 UTC, forecast 0.3%)

Friday 14 August: US Retail Sales m/m (12:30 UTC, forecast 0.1%) | UoM Consumer Sentiment (14:00 UTC, forecast 54.4)

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