Gold breaks yesterday's high — continuation to 4,350 or reject back to 4,229? | XAUUSD Aug 7

Hey, Daniel here, active prop trader. Gold looks bullish today. Pullback buying built a strong upward swing, and now price has broken out above yesterday's high, so I'm expecting a pullback move back into that level here.

Last time, as I shared in the community, I focused on the bigger uptrend and planned a long entry once the correction phase had finished. As it turned out, an upswing formed off the low that carved out the pullback, and price has now rallied roughly 851 pips. The key question right now is whether this upside break above yesterday's high can carry through and turn into a genuine continuation of the medium-term trend.

Of course, if this breakout fails and price rolls back over, several distinct correction patterns come into play, and today I'll walk you through each of those scenarios in detail. So let's dive right in and take a close look at the daily chart first. As for gold, yesterday's daily candle closed as a bearish pin bar, a clear rejection signal.

For yesterday's daily chart, I walked you through both scenarios like this, the bullish case and the bearish case. For the bullish case, since we'd just seen an extremely strong bullish candle form recently, I explained that a follow-through move to the upside was very likely to develop from here. That said, in the short term I explained we'd likely see a corrective phase, or a follow-through push to the upside developing while volatility settles down and calms compared to the previous day.

On the other hand, for the bearish scenario, I explained that if price closes below the previous day's low with a bearish candle, we'd likely see a slow grind lower first, then a deeper pullback developing with a fair amount of volatility behind it. Either way, for a daily-chart entry, the long stop loss would sit pretty wide at broadcast time, so I explained that it's better to work these setups on a day-trading timeframe or lower rather than committing on the daily.

In the end a bearish pin bar formed, so on its own you'd read this as a setup where a downward price correction can easily happen. But as I keep explaining, I always put the most weight on the very latest price action rather than on any single candle. Tracing the move from the monthly candle, the shorts that got triggered off this bearish pin bar are very likely sitting in unrealized loss right now.

So if price breaks out above this high, those bearish stop-loss orders get filled, and that buying wave gets swept up into the move, making it much easier for this upswing to keep running higher. When that happens, volatility stays elevated rather than fading, so price naturally keeps testing higher, and right now that's exactly the scenario I'm treating as my main call on the daily chart.

On the flip side, we're currently testing a breakout above the daily high, but if price reverses right here at this same level and rolls over, there's a strong chance it drops with a fair bit of volatility from here, which is exactly why this current position stays such a critical spot on the chart to watch closely. Now let's drop down to the 1H timeframe. On this 1H chart, just the day before, I ran a session exclusively for our community members right around this red line you see marked here.

Right around where this bearish pin bar formed. Let me walk you through what I covered back then by pulling out a few of the key points and breaking them down here on YouTube. What I was watching first was this bearish doji right here.

While I kept the big-picture strong uptrend front and center, once that doji formed, I saw price shift into a corrective phase. And from there, I explained that my main bias was to look for pullback buying opportunities on the next dip. And looking back at the price action up to this point, the first thing I was watching was right here.

This kind of pullback move right here. After the recent bearish candle formed a doji, that bearish doji triggered a failed breakout above the sideways range, so the upside push just didn't hold at all here. And it closed almost right at the highs, basically a full-bodied marubozu candle.

This was an ideal pullback-buying setup with a strong reversal candle forming here, so from this point I figured price would keep pushing higher. And for our community members, this is something I've explained many times before: when a strong upward swing like this forms, you get a reversal candle that looks absolutely perfect on its own. These reversal candles often turn into really solid long entry points afterward.

That's exactly the kind of setup I was walking through here. And with almost none of the candles overlapping, that clean, momentum-driven upswing kept running, and what finally ended this swing was a bearish doji candle. That bearish doji overlaps the prior candle almost completely, and even a single doji is enough to signal a sideways trading range.

Once this sideways trading range formed, I said we'd at least be heading into a corrective phase. And inside the community, I explained that when a trend runs on this kind of strong upside momentum, a reversal needs certain conditions to line up first before any real trend change can actually happen. I explained I still held a bullish bias, since at the very least I expected price to come back and test this high once more.

So how did the gold market actually end up moving from there? In the end, the move into yesterday's New York session stayed in that same corrective phase. Personally, I thought this area was a solid spot to go long, but in the end it just hit the stop loss.

But the correction kept unfolding, and right from the Tokyo session open today we got a really clean buy setup that pushed on to take out the recent highs. We've now confirmed a strong 851-pip move higher, an 85-dollar range advance. Sure, markets follow the random walk theory and you can't call every move perfectly, but at spots like this, if your stop loss is placed cleanly, you're fine.

Your stop here barely costs anything, so wait for a fresh pullback-buying setup to form and then track the trade from there. The reward here is clearly bigger than that stop-loss distance, so the setup really favors us. Keeping this in mind and constantly adjusting your scenario as the market shifts is exactly what I teach inside my community.

Just recently I uploaded a brand-new lecture video inside the community all about building your trading scenario, So if you're a community member, definitely go check that one out. So today, in the community-only session, I'm walking through three key points covering the upcoming scenario and how to play it. The prior day's high, and how to read a clean breakout to confirm the uptrend is continuing.

Trading a sideways range and using failed breakouts to time entries. I'm breaking down how to time entries after a strong move using these three key points. Is this a fresh pullback, or a failed breakout setup here?

The 1H is shaping up where we'll need to read the price action carefully here. For now, we're staying with a bullish bias again today. That wraps up the gold update.