XAUUSD at 4,141 rally-sell test — reversal or push to 4,039? | Gold July 24

Hey, this is Daniel, an active prop trader. Gold's biased to the downside today. Of the scenario I shared earlier in our community, we're now back inside the Tokyo session range.

As for how price developed since last time, right on scenario, gold broke below that sideways range with strong momentum, and from there we saw a solid move down of roughly 450 pips play out cleanly. Right now we're at a key spot where the rally-selling battle plays out. And if we're going to consider a shift into an uptrend, I laid out those conditions fresh again.

So let's dive right in, starting with the daily chart as always. Alright, gold's daily candle from yesterday closed as a big bearish candle. Since it printed a lower high and a lower low, we can read this candle as very likely acting as a reversal candle here, marking a clear shift in momentum away from the recent push higher on the daily.

From here, I'd expect a move that tests this low, but a sideways range can also form easily. Until price breaks out above the high of that bullish candle just before it, upward momentum is likely to stay weak, so I think the upside push is going to struggle to build any real strength for now. Also, unless we get a move that invalidates yesterday's candle here, the short-term bias stays in a downtrend and we should keep trading with it.

Until price breaks out above the high of candle 2, even if the short term flips to an uptrend, you'll want to bake in the idea that the very best upside target is only as far as that high of candle 2. Alright, let's drop down to a lower timeframe now and walk through what the 1H chart is showing us here. On the 1H, I ran yesterday's Trading Lab members-only stream right around where this red bearish candle marked by the red line formed.

I'll walk you through what I covered there, breaking it down into a few key points here on YouTube. So for the first point, what I was watching here was the sideways range forming, using this candle and this candle as the reference candles that anchor it. This candle overlapped with the one just before it and acted almost like a doji, so with that confirmed, I basically needed to read the direction off the axis of this sideways range.

By theory, the uptrend up to here had closed in a very strong form, so the odds favored an upside breakout, and that's why I initially answered with a bullish bias on this one. That said, since this is a sideways range, we also need a clear trigger for flipping our bias to the downside. If this downside breakout closes with strong bearish momentum behind it, then that's our cue to flip the bias lower, and from there we'd start seriously looking for a spot to set up our short entries.

Now for this whole breakdown, inside our community I walk you through it in even more detail, including the full price action and the exact process behind how I arrived at this call. First I was watching the recent sideways range and the long entry point. This inside bar broke below the outside bar, but the follow-through just never came through here.

The next candle closed as a big bullish bar, completely rejecting that prior drop. When candles line up with equal momentum, there's a strong chance price then forms a flat sideways range. And price really did hold that sideways range for over 4 hours after, while the candle that kicked off the breakout was an outside bar that fully rejected that prior range.

Since it's an outside bar, at the very least when price breaks above this high you should be considering a long entry here. If it tested that low and failed, then dropping to the 5-minute chart gives you a really clear, easy-to-read entry point here. Now looking at what happened next, the level I was watching was the breakout after leg 3, where the follow-through pushed up and completed the rising swing, forming this bullish candle here.

As this bullish candle was forming, I was expecting a three-push-up pattern to develop right here, with this high, this high, and this high marking each successive push. With upward momentum this strong, it's natural for the highs to get tested twice, so at the very least there wasn't a case for entering short here, in my view. A long entry was genuinely worth considering here.

I was walking through this call, and once that three-push move up completed, I figured price would at least come back to test this level here on the chart. I honestly didn't expect the downside momentum to build up this strongly, but if it was going to drop this far, at the very least you should have been taking profit on your longs here. So by the time this session went live, the drop had already played out and we were forming a sideways range, which is exactly why it's easy to hesitate right here.

So I said we should wait for a clear breakout direction before committing to a bias. As it turned out, after yesterday's stream, price broke down cleanly out of that sideways range with a nice, easy-to-read trend candle to the downside. With that strong bearish momentum breaking lower, I flipped my bias to the downside here.

After that, once a sideways range formed, community members asked me too, and at that point I was actually still weighing a bounce here. The reason being, it clearly looked like a bullish channel forming, and with this big bearish candle reading as a downside overshoot, I figured price would bounce back up and come test this level again. With no price action setting up any kind of long entry, price broke straight to the downside, and from there it kept falling a full $45 range, which works out to roughly 450 pips of continued downside.

When a candle with strong downside momentum breaks out of a sideways range like this, price tends to keep following through lower, so with that in mind I walked through scenarios for both directions, including exactly where the bias would flip. Today's community-only breakdown covers this: price has climbed back to the recent Tokyo session high, so the question is whether we build a rally-selling setup here. Recently, our community stream flagged this zone forming that setup, so this could well turn into a pullback.

Let me walk you through this pullback too, and as I keep hammering home, a real trend shift only happens under set conditions. We only flip our bias once those conditions are actually met, so I broke this down to give you a clear, consistent standard for switching your view — the kind of standard that keeps you from getting caught up in these sharp spikes and drops. That wraps up today's gold analysis.