Gold uptrend intact — buy the pullback or fade to 4,200? | XAUUSD Jul 22

Hey everyone, Daniel here, your prop trader. Gold's looking bullish today. That said, short-term we've shifted into a corrective phase, so I want to wait for a pullback to form before hunting the next long.

Just like the scenario I laid out for the community, price shifted into a correction and then went back to retest the top of that rising wedge. After that, price snapped back into the uptrend and rallied a solid 424 pips heading into the New York session open. The uptrend is still intact, but where the next pullback forms is the key question now.

Today I broke down exactly which levels to target and how to trade them. Alright, let's dive right in and break down the daily chart in detail as always. On XAUUSD, yesterday's daily candle closed as a strong bullish bar.

My main scenario for the daily chart yesterday was the completion of a falling wedge right here on that daily timeframe. First, breaking out above this recent downtrend line was the key condition for that falling wedge to confirm. The prior day clearly broke above that downtrend line, closing with a big bullish candle that confirmed the move higher.

As I mentioned in yesterday's video, if this plays out by the book, gold should be able to push all the way up to 4200. That said, in this bullish setup, if we get follow-through to the upside, it just keeps running. We should mainly play for the scenario pushing up to the highs, but you always need to keep the opposite one in mind too.

For example, if today's daily candle flips over and closes as a bearish reversal candle instead, if price drops away from the current high and forms a bearish reversal candle like this one here, even a single candlestick like this can confirm as a clear, decisive bearish signal here. Not just the long from today's open, but the long entry on this candle right before it too could easily get its stop-loss orders triggered in this kind of move. So a scenario like that isn't off the table either, and I think it's something we really need to keep in mind here.

Alright, let's drop down the timeframe now and take a look at the 1H chart. For the 1H chart, I'll walk you through part of what I broke down for the community members yesterday, sharing some of that analysis here on YouTube as well. The candle I'd been watching most closely is this one right here.

At the time of the stream, we were right at this red line, just after that clear buying-climax candle formed. Since a candle setting up a sell had formed, I explained there was a high chance the market would step into a corrective pullback phase, at least for the near term. This is the short-term outlook I saw.

On the other hand, the upward momentum right up to this candle clearly forms a bullish swing, no question about it. Since that momentum was extremely strong, I'm telling you that from here this drop should really be seen as just a corrective phase, so we should be looking to consider pullback buying again.

With the market forming such a clear and easy-to-read uptrend structure like this, With that climax candle capping such a strong upswing where momentum was clearly powerful, Without price retesting that high and failing the breakout with a clear rejection, it's tough for the bears to jump into shorts easily here So both the bears and the bulls actually agree on one thing here: there's a solid consensus that price wants to take another run at the highs.

So it turned into a setup where bulls could confidently go long here. Now for the candle I was watching, let me walk you through my whole thought process here. First up, this candle here is a really clear reversal candle.

This candle is overshooting the upper boundary line of the rising wedge pattern right here. With wedges, price very often overshoots first, then reverses sharply from that level. This was really a setup where you should've waited for that move and then shorted.

After that, an overshoot and reversal looked quite likely here. From this candle onward, I was expecting a pullback lower for now. Next up, this candle here formed a clean bullish doji, a clear indecision bar.

After this, the downside follow-through stalled and a bullish doji indecision bar printed. At this point I'd say the odds of retesting the wedge's lower boundary, that original starting zone, have dropped noticeably lower. So either way, if price does head lower, it has to break down through this doji line first.

A downside break of that doji line would set up a proper short entry here. After that, most candles overlapped and price shifted into a sideways range. Inside it we can also spot doji candles, so this is clearly a sideways range we can confirm here.

After that, we get this reversal low, then the upside breakout, followed by that pullback candle right here. There were at least two clean setups here, and this is where you had to flip your bias. Then price broke out above the wedge's upper line, so the bias clearly flipped bullish.

That said, we've confirmed a reversal pattern, so we may see a pullback phase soon. This was the price action leading up to this candle's read, and we'd been carefully weighing pullback buys here. Now let's track the price action after, this red line, since the call went out.

As it turned out, from this candle onward, the previous day rolled into a clear correction phase. Across the candles up to this point, we've confirmed a drop of about $35, roughly 356 pips lower. And it just broke out of that rising wedge, then retested it, printing a bearish doji candle.

Given that setup, you could technically go long on this bearish doji here. Another option here would've been a stop-buy entry the moment price broke out above the high of that doji candle — that setup was clearly available too. Sure enough, it turned into a pullback, then rallied a solid $42 into the New York open.

So in pip terms, that move added up to roughly 424 pips to the upside. From the correction phase back into the uptrend, this played out exactly as scripted. As for the setup, it's been very strong right from the open, climbing in one clean directional trend all the way up from the Tokyo session low.

The uptrend structure is still fully intact, so today I'm leaning bullish here. Now, for the deeper breakdown, today I've laid it all out in three key points, just for our community. I'm watching for the shift into a corrective phase and pullback formation, and exactly what shape to wait for before judging it a valid pullback entry.

Since we're aiming to catch the resumption of the uptrend, this becomes a really important point to watch here. It's not about simply riding the existing uptrend, but about targeting the resumption of it, so this zone here becomes really important to watch. Today my overall bias on gold stays to the upside. I'll keep hunting for spots to go long on this market. That's it for today.