Gold pullback after +859 pips — buy the dip to $4,200 or reject? | XAUUSD Jul 21

Hey, this is Daniel, prop trader. Gold is looking bullish today. But short-term, we've now shifted into a pullback phase.

So I'm expecting price to form a pullback, then push back up toward the highs. Just like the scenario I shared with the community, even after breaking below the rising wedge, price didn't just flip into a full downtrend as feared. We've now confirmed a rally worth 859 pips, counting from the post-broadcast break.

Right now I'm watching this short-term corrective phase closely. Where the pullback forms and where to go long next. I walked through those key levels and the exact play.

Alright, let's dive right into the daily chart in detail. On the daily gold chart, the previous day closed as a bullish pin bar. It's not a pin bar with a long lower wick, but one that closed with a long upper wick.

On the daily, the candle that broke below this bullish doji line is now the key line, so we expected downside follow-through, After making a lower low, a bullish candle formed and that downside follow-through got completely negated. On the other side, at this point the candle is sitting inside the prior range, forming an inside bar setup. Yesterday's daily candle closed making both a higher high and a higher low.

With that long upper wick, we can see sellers pushed back with a fair amount of pressure up top. On the daily, price action right now is trying to hold onto a decent-sized bullish candle body. If price manages to break out above this lower trendline to the upside here, Now, given that these recent lows are making smaller and smaller downside moves, and this bearish follow-through got rejected here, with each new low making a smaller move down, we're starting to see the potential for a falling wedge to form here.

If a falling wedge does form, then by textbook theory, taking this point as the wedge's origin, the pattern suggests we could see a push up toward the 4,200 dollar area from here. I'm watching where today's daily candle closes as a bullish bar, and whether price can finally break out above that trendline here. Now let's move down to the 1H chart and take a look.

Yesterday's community-only stream went out right around this red line, right as this bullish doji candle was forming here. Let me walk you through a few of the key points I covered there, right here on the YouTube channel too. The first thing I was watching was this price action here.

After a fairly extended downtrend, we got this big bearish candle that looked like a climax top. On the following candle, price kept printing lower lows, yet a strong bullish candle formed that clearly rejected the prior selloff, giving us what we call a reversal low here. Since this had clearly formed into a strong buy setup, I made the call for a reversal here, keeping in mind that price could well flip into a full uptrend from this point.

Looking at the price action that followed, we got a strong upswing, a two-candle thrust up, then a half-baked sell setup formed and price started pulling back lower from there. This looked like a pullback into the sideways range we'd just broken out of, and here again we could clearly confirm buyers stepping in to support the price. We came into the close without taking out the recent high, but at the same time the sellers weren't pushing hard either, and you can tell that from just how small the size of this bearish candle really is here.

After that, price built a clean, easy-to-read structure, first lifting the recent low higher, and then following through by pushing the high up as well. That said, if you look at each swing's length, they've been shrinking step by step, so the range of each new high push kept getting narrower. Right at the time I filmed the last video, the confirmed 1H candle had broken out above the wedge's upper boundary, popping to the upside in what looked like a classic overshoot beyond that line.

If theory holds, the wedge had likely completed, so short-term I leaned bearish with a downswing forming easily, but for the medium to longer term the scenario I laid out was clear: this is a pullback-buying setup, so look to buy the dips. One reference point I was watching was this clear setup formed by these two candles, and the read was simple: if price tested this zone and broke below it, I'd need to flip my bias. So the key question becomes, how did gold actually move from there and play out?

The previous day formed a textbook falling wedge and broke out to the downside, but instead of selling off and flipping into a downtrend like theory suggests, it didn't. After printing a doji candle, it carefully built a double bottom, formed a clean buy setup and a reversal low, then turned around and rallied higher. The move played out exactly as our scenario mapped it, climbing a full 85 dollars, which works out to a solid 859 pips higher.

Today's community-only breakdown covers these three points. We're now shifting into a correction phase, following that very strong upswing during the Tokyo session. I'm watching how the pullback forms next, mapping out long entry points and the bias shift, so we can set up longs no matter what price action prints from here.

I also break down in detail how a pullback can play out on a candlestick basis. That wraps up today's gold analysis for you.