Gold broke the range — pullback buy at 4,247 or fade to 4,065? | XAUUSD Aug 6

Hi everyone, Daniel here, an active prop trader. Gold is biased to the upside today. On the 1H we're shifting into a corrective phase, but since the daily just broke out above the range, I'm still prioritizing pullback buying as my main play.

Just as I flagged to the community last time, once price broke out above the previous day's Tokyo session high, the uptrend kept going. And in the end, even counting from that pullback candle, we saw a strong move of a full 1210 pips to the upside. Right now, the key question is exactly where this correction is going to end.

Today I walked you through it all in detail: the levels where we should be looking for pullback buying, the specific conditions that let us consider a short-term short, and the criteria that tell us price is swinging back into the uptrend. So let's dive right in, starting with the daily chart in detail. On gold, the daily candle ended up closing as a big, strong bullish candle by the end of the session.

As of yesterday, the scenario I laid out was this: volatility on the daily range had been contracting, so we were shifting into a stage where a breakout becomes far more likely. And I said if today's daily candle breaks above the recent swing high and closes up there, then short-term the upside bias tends to strengthen, and the odds of the direction firming up to the upside get pretty high. On the flip side, I also walked through a bearish scenario, and here's how that one played out: price would slip back down into the range, and from there the most likely development would be a move that comes back to retest this key level once again.

So how did the daily-chart scenario actually resolve? The bullish case I'd flagged as my primary read is exactly what played out here. Yesterday's daily candle, as I mentioned, printed a big bullish bar, so we've now broken cleanly out of that long sideways range on the daily chart.

For a while the bias favors more upside, and follow-through to the top side is likely, but on the shorter timeframes I'd expect either a corrective phase, or that upside follow-through to come with calmer volatility than we saw yesterday. That's roughly how I'm thinking about it. On the bearish side, if today's daily candle closes as a red candle below yesterday's close, then I think we're in a situation where volatility gradually picks up and downside follow-through becomes much more likely to develop from here.

Either way, the key point is that if you want to open a fresh long here on the daily chart, the distance down to where you can realistically place your stop loss is quite wide. So rather than opening a brand-new long at the daily-chart level, I think it makes more sense to trade on the intraday timeframes and below, and that holds true even if the picture flips bearish here as well. Now let's move down and take a look at the 1H chart.

On the 1H chart, yesterday's community-only stream went out right around this red line, where that long lower-wick bearish candle formed. Here on YouTube, I'll walk you through it by pulling out a few of the key points we covered inside the community and going over exactly what I broke down for members there. The first point I walked through was that we've still got a strong uptrend with solid bullish momentum, and the key question I flagged was whether price can push through and clear the Tokyo session high, right around this area here, so that's really the level to watch.

My main scenario, and what I laid out for you here, is that even if we do slide into a pullback after this move, price is very likely to turn around and take another run at those recent highs. So why did I make that call? Naturally, since we'd been in a range right up until then, you'd expect price to fall back into that daily range — but reading the price action through this process tells me that's not what's happening here.

This whole uptrend carried really strong bullish momentum. And why did the upside momentum get so strong? Because each individual price action along the way became a factor that kept accelerating the breakout to the upside, pushing price higher and higher.

The first key point here is that price entered this sideways range, and that's exactly where we ran our market analysis the day before. This overlay maps out each trading session, and here we're looking at the previous day's London session open. Right at that point, price tested the upper edge of the sideways range that had been carrying over from the prior day, and that's exactly where we built our sell setup.

We did get some follow-through to the downside, but it wasn't strong enough to actually break the range lower, so my read was that price would basically keep playing out the way the wedge theory says it should. The reason for that is we were seeing price make a clear attempt to test the upper edge of this wedge here. First, these two candles at the Tokyo session open formed a trading range, and looking at the 5-minute chart afterward, it clearly shaped a rising wedge.

There's no particular reason to sell, but volatility right now is so high that this upward momentum looks weak. Yet if you match the scale to the move just before it, you can clearly see the uptrend had been continuing quite cleanly. So I figured it might just retest the wedge's origin and stop there, and that's exactly what happened.

After that, it printed a doji outside bar right here. An outside bar tends to give clear directional bias toward the breakout side, so when you get a clean price action signal at an obvious level like this one, you just trust it and trade the pattern as it plays out. As a result, this doji breaks upward and we get fresh follow-through higher.

Now keep a close eye on the price action here, because the market is once again forming a clear rising wedge pattern. Rising wedges usually overshoot before reversing, and looking at this reversal candle, price overshot right at the level where you can draw the wedge line, then flipped. The drop after that stayed very weak.

Even though price is following this pattern, the downside momentum is weak, and since this is the second wedge, that tells us momentum is actually building and the bulls are gradually gaining control of the backdrop here. In that setup, price then tested the wedge's origin just as the theory says, and again formed a two-candle sideways range there. So now the exact same pattern had repeated twice, which naturally gave the bulls enough confidence to step in and buy here.

And this buy setup right here closed in a really clean, textbook-perfect shape. It's also a pullback against this range, and the prior candle was bearish, but it formed almost like a pin bar, then this big, nearly full-body bullish candle. And this entry candle here is really quite small.

With risk capped, bulls can easily enter longs here. This strong bullish momentum has fueled a solid uptrend here. Now tracking what happened afterward, right around our broadcast time, you can see it formed a bearish doji candle here, a classic indecision signal.

This doji marked the Tokyo session high right at this level, and the momentum leading into it had been extremely strong. My thinking was that once a buy setup formed after this, we'd likely see a solid pullback and then a clean push higher from there. So how did gold actually play out from there?

The uptrend just kept right on going. Once price broke above the Tokyo session high, we did get a brief pullback candle, but after that gold surged an impressive $121, which works out to a full 1210 pips. So with this strong uptrend now in place, in today's community-only stream I walked through both the bullish and bearish scenarios, breaking everything down around these three key points.

The first point is how you position yourself in a strong uptrend. Even when a market looks like it's climbing in a straight line, the individual price action is often carving out clear pullbacks along the way. I walked you through how to think about pullbacks there.

And if you short off these reversal candles alone, you'll get squeezed easily. It kept printing very clean reversal candles, but since the uptrend was intact, Reading price action as a process rather than single candlesticks, plus how to find an edge during pullback phases — those three points were today's Trading Lab members stream. Gold is still in an uptrend right now, and that move is ongoing. So today I'm looking at buying that pullback dip. That wraps up today's analysis.