Gold at $4,506 — bounce or breakdown to $4,500? | XAUUSD May 18

I'm Daniel, an 8year prop trader helping beginners master trading from scratch running the Trading Lab FX community to help you profit Check the video description below for more details on that Today I'll share my gold technical analysis from Trading Lab. I'll walk you through my full market analysis for today. Right now I'm displaying the 1-hour chart from last Friday's session.

The downtrend on the 1-hour chart is still continuing right now. So my overall bias remains firmly bearish on gold. Let's get into the analysis now, starting as always from the east.

I'll also be walking through a more detailed breakdown of last Friday's close. A large Doji candle has confirmed a major breakout above the key level. So we have a breakout close confirmed on this Doji candle, and that is the current market situation.

Based on this Doji, a measured move target is now set. So there is still some limited downside room remaining in this market. At the week open, we can measure the major move from this sideways doji range pattern.

If price drops by the full measured move, a test of the 4506 dollar level looks very likely. So that is the current market situation we are looking at, and this candle here shows a breakout. This candle, which we can call number one, represents a clear breakout to the upside on the chart.

The momentum on this candle is quite strong, suggesting a longer-term target near 4500. A dollar breakout scenario is also worth watching. So this is absolutely a scenario we should keep firmly in mind right now.

Now, that was the bearish scenario — let's cover the bullish side. A scenario where price finds a deep pullback low around the 4500 dollar level. For example, price forms a double bottom here and reverses back upward.

This scenario also falls within our bullish outlook. In cases like this, our bullish scenario would naturally apply. When the target is hit, leaving the weekly candle body intact.

So Monday's daily candle should close in that shape, formed by this key selection. In this case, candle one marks a breakout above the horizontal range. Think of it not as a swing high, but as a selling climax candle.

In short, this level becomes the high point for a bearish swing trade setup. This becomes the selling climax after a sustained downtrend. This candle then becomes a key level traders will watch closely.

The real body here is relatively smaller than the prior swing's candle body. So after that corrective swing ends, the subsequent rally forms a rising swing with progressively higher closes. Therefore, after forming this corrective structure, the bullish trend tends to continue more readily.

In that case, even if the subsequent pullback is shallow, a breakout above this prior high remains well within scope. I don't think we should be adding short positions here. That covers the cooling-off phase for now.

Let's shift to the one-hour timeframe chart. Last time, I shared a Trading Lab members only breakdown of the one hour chart. That signal confirmed right around this candle close, for Trading Lab.

The full details are exclusive content for Trading Lab members only. So I'll just cover the four key points briefly here. Currently we're seeing a bearish signal with a range-bound price correction.

We should wait for a clear chart pattern to form first. Because after a sustained swing in one direction, the market tends to shift. After forming that large bearish candle typical of a selling climax, key zones formed.

Because price was forming those key rejection pinbar setups after the climax move. To enter a fresh short, we first need at least one pullback in trend. Even for trend continuation, some pullback is needed.

For example, price tests the upper channel boundary, turning bearish. A flag forms, then a double top, leading price lower. So I anticipated this move, watching for bearish signals and range shifts.

We should wait for a clear chart pattern to form first. There wasn't much room left to grow from that entry point. As usual, let's review yesterday's price action and the sideways range.

We were watching for a false breakout signal at this key level. After the false breakout confirmed, price ultimately reversed lower. After the breakout, price followed the classic measured move theory.

I covered each step of this price action sequence in detail. I also covered what to watch for in the subsequent price development. The follow-through on that signal was actually quite weak here So despite forming that reversal candle, the follow-through was weak So we can see that the bullish swing simply did not follow through.

The best approach now is to wait for a pullback before entering short. After a bullish trap forms, we can look for a reversal short. The ideal setup is to enter a short position there.

Looking back at the outcome, the price action after the stream matched what Daniel described. You can see here that the upward momentum has clearly been weakening on the chart. We had a clear bearish breakout pushing strongly lower, with price making significant new lows to the downside.

Now the range of new lows is narrowing into a sideways consolidation. So technically we are still in a downward trending structure right now. So I called it bearish, but we could still see a pullback move here.

We need to plan around these two scenarios using this range as our key axis. Today in Trading Lab, I covered both of these scenarios in detail. For Trading Lab members, I shared a much more detailed breakdown.

I also covered the weekend price action in detail, breaking down the overall trend direction for members. But basically, from the market open, we're watching for a breakout of this sideways range. We should be prepared for these two key trading scenarios.

We also do streams for Trading Lab members, plus a cooldown recap. On the cooldown, first ask if this is a selling climax candle. Will this be the breakout candle or not?

Which is correct? We'll confirm the answer when Monday's candle closes for good. That wraps up today's gold market analysis from Daniel.