Gold at Tokyo range low 4,047 — bounce or break to 4,020? | XAUUSD Aug 3

Hey, this is Daniel, active prop trader. Gold's biased up today. The Tokyo session gave us a textbook trading range, and right now we're sitting at that range low, printing a long lower wick here.

Since we're near the range low, my base case leans bullish here. That said, if price breaks down below this Tokyo session low, then I'll flip my scenario over to the downside and start looking for shorts. Just as the scenario I shared with the community played out, on Friday, right from this breakout candle, price kept following straight through to the downside and dropped roughly 666 pips.

Right now the focus is which way this Tokyo session range breaks, and on the daily chart we've had a sideways range dragging on for quite a while too. If this shifts from just a range breakout here into a breakout at the daily-chart level, then we're looking at a situation where you can expect some really strong momentum behind the move. So today I'll walk you through in detail exactly how to position yourself in that scenario.

So let's dive right into the daily chart in detail. On the XAUUSD daily chart, price is still holding sideways, forming an inside pattern within that same bullish doji candle from before. Last Friday's daily candle, this one here, closed as a big bearish bar.

What this candle confirms, and I mentioned this back in the last video too, is this. Near this doji's high, the sell bias tends to kick in, and this candle confirms it. And more recently, this lines up with the entry point from that daily-chart swing right here.

We can confirm these levels are being watched as key points, and both the upper and lower boundaries are now becoming fairly well defined. On the other hand, this bullish doji candle still hasn't completed a clean breakout in either direction yet. So on the daily chart and the shorter timeframes below it, you obviously want to ride the most recent trend here.

As the local edge of that trend, the upper and lower boundaries are clearly defined, so you really need to build that into your strategy and trade around it. Just to add here again, on the daily chart we're still stuck in that sideways range. On the leading trend, this really isn't the spot to open new positions.

That view hasn't changed at all, but I wanted to flag it as a genuinely important point here. Now let's drop down a timeframe and look at the 1H chart. On the 1H, the last community-only stream lined up right here at this red bar, a bearish candle with a fairly long lower wick.

Let me quickly walk you through, right here on YouTube, what I was actually breaking down at that point. The first key point is about the bias here. At the time of the stream, price had already broken below this rising trendline, breaking it out to the downside.

So basically, I was telling you the bias was tilted to the downside. On the daily chart, though, and this hadn't changed on Friday either, we stayed in a sideways range. So I explained that the fourth daily candle from the prior day tends to act as a really important pivot level here on the chart.

On the flip side, if we do get a trend reversal here, where this ongoing downtrend finally flips over to the upside, As always for this scenario, we watch for early signals ahead of time, like a trendline breakout or a channel overshoot, I explained that we should base our decision around this level here. Inside the community, I also walk through the full thought process behind each of these decisions. Let's first look back at the New York session yesterday, where price printed a bearish doji right at this high, signaling that this minor uptrend running up from here was showing early signs of ending.

On the very next candle, price dipped below this recent bearish candle's low, then printed a long lower wick and reversed back up. With bull waves failing to make new highs, and bear waves with no confirmed follow-through after the setup, it leans toward that kind of pattern, so I was thinking the market would likely settle into a sideways range here. And how did it actually move?

Yeah, it settled into a sideways range. But inside this range, the actual volatility clearly showed traders staying very mindful of a possible sharp drop. It settled into a tighter sideways range than expected.

After that, this candle breaks out of that sideways range to the downside. Price follows through, gets confirmed, and keeps pushing lower here. If you focus on this bearish candle right here, you could actually analyze the possibility that this downswing was about to end for now — that's what I explained.

So where exactly can you spot that this downswing is ending? First, look at how the candle body sizes are shifting here — each body is getting progressively smaller. And right as price touched this rising trendline, we got a bearish doji candle here.

On top of that, this was clearly the smallest candle of the whole downswing here. So at the very least, a sideways range here was the expected scenario. To spot the end of that one downside swing, this kind of price action is exactly the clue worth watching closely.

And right after that, if you look at the price action just before this recording, it clearly shifted into a sideways range again. So this is a clean upside breakout to the upside here. Even with some failed breakouts earlier, this breakout candle closed as a clean marubozu, a really strong bar.

Since we'd confirmed that kind of bar, I was calling it a shift into a clear downtrend. So I was explaining the bearish bias would keep going. So how did gold actually move over the course of just last weekend?

Let's see. From that failed breakout high, gold slid cleanly all the way down into the New York session open. That's a move of 66 dollars in range, roughly 666 pips of downside confirmed on the chart here.

Relatively speaking, for a Friday, gold gave us pretty clean price action. So today, I'll walk you through three key points from our community-only stream. What I was watching was the Tokyo session trading range.

This trading range tends to form from the typical open-price action we see. These price-action traits and our current bias all pivot on this range built in the Tokyo session. Flipping our bias around this range, plus this daily-chart sideways range, if it does break out here.

Momentum is likely to build up quite strongly here. I gave a detailed breakdown of exactly how you should be trading a market like this. Gold today is looking to retest the Tokyo session low once more. This is a spot where switching your bias needs real care. And that wraps up today's gold analysis for you.