Liquidity game: Monthly recovery implications?
The last trading session of the month always holds special significance as large capital flows engage in the process of closing and rebalancing positions, and currently, gold is clearly reflecting this. After the previous sharp decline, the market has formed a technical recovery phase by breaking the short-term downtrend structure and reclaiming the support + FVG areas below. However, it is important to emphasize that this is still a recovery phase within a larger downtrend, lacking sufficient factors to confirm a medium-term reversal. On the macroeconomic front, the context of slowing growth while inflation remains persistent causes the market to continuously adjust monetary policy expectations. This creates two-way volatility phases, especially at the end of the month when funds need to rebalance their portfolios. The current capital flow does not show signs of long-term accumulation but leans towards short-term guidance – creating liquidity before important price zones. On the H4 chart, the price structure is moving in a recovery phase to retest the supply zones above. The 4550–4600 area (FVG + old demand + fibo 0.786) acts as the first reaction zone, where the price is approaching. If the buying force is strong enough and the H4 candle closes firmly above this area, the possibility of expanding to the 4700–4750 area (demand + trendline + fibo 0.5) is entirely possible. However, this is also the decisive zone – where strong selling pressure previously appeared, and it is likely to be a redistribution area if the downtrend continues to be maintained. Conversely, if the price fails to hold the 4550–4600 area and a clear rejection signal appears, the market may quickly return to test the 44xx support area, and deeper into the low liquidity area around 41xx, where large capital flows tend to complete the liquidity sweep process. Overall, the 31/03 session is not just an ordinary trading session but a crucial confirmation point for the month's capital flow. The current recovery should be viewed as a rebalancing process before major decisions, and the price reaction at the 4600 and 4700 areas will play a key role in determining whether the market continues the downtrend or begins to form a new accumulation structure. LucasGrayTrading
