Gold Bullish After $35 Drop — Key Levels for May 6 | XAUUSD

Hello, I am Daniel, a professional prop trader with eight years of experience. I run the TradingLab community, helping beginners learn to trade. Check the description for details.

Today, I will analyze gold, including insights shared in our community. Looking at the one-hour chart, the trend is clearly bullish. We have strong upward momentum and a continuous swing.

Since seven in the morning Japan time, we have seen eleven hours of straight thrusting upward. With the trend clear, let's proceed with our usual detailed analysis, starting from the daily chart. Regarding gold, the previous daily candle closed as a bullish candle with a long upper wick.

Yesterday, I discussed two scenarios, and we saw a return into the consolidation range of the bearish doji candle, which was the bullish scenario. However, the price action is inconclusive. The body of the bullish candle did not fully return inside the doji.

Therefore, I need to re-evaluate the price movement. I re-evaluated the downward momentum from the high. The candles overlap, so the momentum is not strong.

The candle that barely overlaps is the first thrust down in this swing, likely a selling climax. After forming a buy setup, it formed a doji, showing weak momentum. Although it made a lower low, if it closes as a bullish candle today, it could be a pullback for the previous drop.

The market is shifting to focus on a return to the long-term uptrend. Today, the key is whether it closes as a large bullish candle. I don't think it's wise to enter a long position on the daily chart now because the risk is too high.

If you set a stop loss at the recent low, the risk-to-reward ratio is poor. The ideal entry would have been breaking the previous day's high with a stop loss below the low of the bearish candle. Regardless, it's difficult to trade on the daily chart right now.

Since the daily price action closed in an inconclusive way, it is difficult to determine the direction on the daily chart. Let's look at the one-hour chart based on this. Regarding the content shared with the community yesterday, I cannot discuss the details on YouTube, but I covered three main points.

I mentioned that given the daily situation, there was a high possibility of returning to the daily range, specifically back into the bearish doji candle. Second, after testing the upside in the short term, we tested the lower end of the doji, reversed, and then moved toward the measured move of the double top from the previous day. We anticipated a scenario where it would drop to the measured move.

As always, I also reviewed the previous day's market movement. I explained in detail the sequence of events: the transition to a sideways range, the downward breakout, the reversal from the New York market close, and the trend reversal to the upside at the Tokyo market open. As a result, the market returned to the daily range, then reversed from the New York market and started to decline.

A buy setup formed in the London market. Then, a small upward swing formed as it returned to the daily range. After that, it reversed and fell.

The New York market continued to decline, resulting in a drop of about thirty-five dollars, or three thousand five hundred and twelve pips. It went as expected, but today, as I mentioned, a clear buy setup formed at seven in the morning Japan time, and it is still in a strong upward swing with high urgency. Because such a strong upward swing has formed, it is not a good idea to go against the trend.

Bulls will likely look to buy on dips. I think we should maintain a bullish outlook and focus on long entries. Also, in today's community update, I provided a detailed explanation of the points to watch for in today's trading and how to enter long positions.

I also reviewed the previous day's market, including the reversal from the London market to the New York market. Today, I am maintaining a bullish outlook. That is all for today's gold update.