How to Analyze XAU/USD with SMC: The Process We Use Every Day

Stop Guessing. Learn to Read Gold Like an Institution.

Every day, before Asia, London and NY open, we do the same analysis process in XAU/USD. No classic indicators. No “gut feeling.” Just structure, liquidity and price action.

This is the exact process. Step by step.

Step 1: Determine the Bias in HTF (H4 / Daily)

First and foremost: what is the market doing in higher timeframes?

Open the Daily chart. Ask yourself two questions:

Is the price making Higher Highs and Higher Lows (bullish) or Lower Highs and Lower Lows (bearish)?
Was there a recent CHoCH (Change of Character) that changed the trend?

If the Daily is bullish, you only look for longs in lower timeframes. If it’s bearish, only shorts. If it’s not clear — you don’t trade.

This alone eliminates 50% of bad trades.

Step 2: Mark Liquidity Levels

Liquidity is where stop-losses accumulate. The market hunts these levels before making real moves.

On the H4 chart, mark:

Equal Highs / Equal Lows — obvious double tops/bottoms where retail places stops
Previous Day High/Low (PDH/PDL) — institutional reference points
Weekly High/Low — high timeframe liquidity pools
Range of the Asian session — frequently swept in London

The rule: liquidity is swept before the real move begins. If you see a cluster of stops above, wait for the price to grab them before turning.

Step 3: Identify Order Blocks (OBs)

Order Blocks are the last candle before a strong impulsive move. They represent zones where institutions placed orders.

How to find them on H1/H4:

Look for a strong move (3+ impulsive candles in one direction)
The last opposing candle before that move = the Order Block
Mark the body of that candle (not the wicks) as your zone

Quality Control: A valid OB must have:

Caused a Break of Structure (BOS) or CHoCH
Left a Fair Value Gap below/above
Not been tested yet (the first touch is the strongest)

Step 4: Find Fair Value Gaps (FVGs)

FVGs are three-candle patterns where the middle candle is so impulsive it leaves a “gap” between candle 1 and candle 3.

These gaps act as magnets — the price tends to return to fill them partially (the 50% level, called Consequent Encroachment).

In Gold, H4 FVGs are the most reliable. H1 FVGs are good for intraday entries. M15 ones are only for scalping.

Step 5: Check Correlations

Gold doesn’t move in isolation. Before each session, we check:

Asset	Correlation	What It Means
DXY	Inverse	Dollar rises = Gold falls (generally)
US10Y	Inverse	Yields rise = Gold under pressure
Silver	Direct	Silver confirms Gold moves
VIX	Variable	Volatility spikes can drive Gold
Oil	Indirect	Inflation proxy

If DXY is falling + Silver is rising + Gold is in an H4 Order Block = high confluence.

Step 6: Wait for the Killzone

The biggest mistake retail traders make: trading outside session hours.

80% of Gold’s daily range occurs in three windows:

Killzone	UTC	Chile	What Happens
Asia	00:00–03:00	21:00–00:00	Range construction, liquidity formation
London	07:00–10:00	04:00–07:00	First move, usually sweeps Asian range
New York	12:00–15:00	09:00–12:00	Higher volume, continuation or reversal

We only take entries during London and NY Killzones. Asia is for observation.

Step 7: Entry Model

Everything above leads to this moment. The entry checklist:

Clear HTF bias (Step 1)
Price swept liquidity (Step 2)
Price is in a valid OB or FVG (Steps 3-4)
Correlations confirm the direction (Step 5)
We’re inside a Killzone (Step 6)

Then:

Drop to M5/M1
Wait for a CHoCH on lower timeframe (turn confirmation)
Enter the FVG or OB that caused the CHoCH
SL below the liquidity sweep
TP at the next liquidity level (opposite PDH/PDL or equal highs/lows)

If any step is missing, we don’t enter. Discipline over action.

Real Example: London Session

This is how it looks in practice:

Daily: Bullish — Higher Highs since last week
Liquidity: Equal Lows formed at $4,710 during Asia
Order Block: Bullish OB at $4,700 on H4 (not mitigated)
FVG: Fair Value Gap on H1 between $4,705–$4,715
Correlations: DXY falling, Silver up 0.4%
Killzone: London open, 07:15 UTC
Entry: Price sweeps $4,710 lows, CHoCH on M5 at 07:22, entry at $4,712

Result: TP1 at PDH $4,745 (+33 pips, R:R 1:3)

What This Process Does NOT Include

RSI, MACD, or any lagging indicators
“Gut feeling” or “looks like it wants to go up”
Trading during dead hours (14:00–23:00 UTC)
Entering without a clear invalidation level (SL)

Test It Yourself

We publish this exact analysis before every session — free on the blog. Each post includes:

HTF structure and bias
Marked liquidity levels
Active setups with exact Entry, SL and TP
Correlation check
Market Maker reading

Pre-session reports (with exact setups delivered 30 min before open) are available with a subscription.

Or start with the free analysis: check out the latest Gold analysis and follow it on your chart.

Want the AI version of this same workflow?

Analiza.LH runs this 7-step process automatically on real-time XAU/USD candles. You pick the framework (SMC, ICT, Wyckoff or Elliott), it returns bias + key levels + setup + trigger + invalidation in under 20 seconds. First analysis is free.

Useful reads to pair with this post: