Gold at 4,343 — breakout to 4,362 or back to 4,310? | XAUUSD Aug 14

Hey, this is Daniel, your prop trader. Today gold's looking bullish. Since last time, price broke below the rising trendline, so the bias flipped bearish, and then we saw a pullback-style move develop right after that.

From the New York session open, price sold off sharply, dropping roughly 909 pips down to the recent swing low. Right now, after testing that recent low twice, price bounced and we're seeing a clean breakout above the descending trendline. Around this area I sent an early alert to the community, and just as planned we're now getting solid follow-through after the upside breakout.

After this, there's also a key level for reassessing our directional bias, and I'll walk you through it in detail. So as always, let's kick off with a detailed look at the daily chart. On the gold daily chart, there are two scenarios I laid out for you back on the previous day.

The key premise here is that the recent bearish push was genuinely strong, and that's something we can now clearly acknowledge and factor into the picture going forward. With two doji candles forming back to back, I mentioned we're likely to see range-bound, sideways price action. And after a breakout, meaning specifically once we break out of these doji candles, we tend to see a strong directional move, so the way we think about it stays exactly the same here.

The daily chart is range-bound, and during the day it also traded in a range, then from the evening, Japan time, the London session open, I explained that around the New York session open, breakout-style moves tend to happen easily here. As it turned out, the prior daily candle on gold formed a bearish outside bar right here. It closed as a doji, but overall it printed a big, decisive bearish candle here.

Basically, we broke below the previous day's doji low, so a downside follow-through move is very likely to develop here. In short, we've shifted into an environment where a broader pullback against this uptrend is far more likely to unfold from here, so keep that in mind. So today, looking at the daily candle alone, it's very likely to close leaving a bearish body behind.

If it closes as a bullish candle or a small-bodied bearish one, there's a real chance we form another sideways range using yesterday's doji-like bearish candle as the base level. Rather than a strong bullish breakout in one clear direction, the truly powerful move probably only comes once we break out above the previous day's high. If we get a bullish reversal candle, or a bearish candle with a small body, then I think price is likely to pull back inside this outside bar for now, rather than pushing on.

So now, let's move down and take a look at the 1H chart. Yesterday's community-only session happened right around this red line here. Right as this long lower-wicked bearish candle formed at the red line, I ran that community-only session.

Now on YouTube, let me share a bit of what I was explaining to the community at that exact timing, walking toward that line. What I was focused on first was this huge oversized outside bar right here. Anchored around this bullish outside bar, a sideways trading range has been forming.

And the bigger takeaway I explained was that direction tends to get decided by whichever way this sideways range breaks out. I also said that as long as this blue channel holds, we basically stay biased to the upside. I mentioned that if we get a bullish price action confirmation off the lower edge of this channel, I'd look to consider a long entry setup here.

On the flip side, for the bearish case: if we see a strong break to the downside below this outside bar, that's where I'd flip my bias and switch over to a bearish outlook on price, looking for shorts instead. The next key level to watch is the prior day's low, and at the New York session open we'll want to reassess price direction all over again from scratch. Basically, even if we get a breakout with proper follow-through, the New York session open tends to kick off a completely different flow, so treat it as a key turning point in the day and watch that time window closely.

As always, I've also walked through several key price action moves worth noting in how the market has traded up to broadcast time. What I was watching first was the rally off that buy setup, then after that bearish doji formed, we got a bullish reversal candle printing higher lows and higher highs that fed straight into this upward segment, along with all the smaller price moves along the way there. On this move I think it cycled through those three phases: the doji, then the inside candle, then the upside breakout.

And we also confirmed my own short-term correction price-action pattern, the one I've walked through many times for the community. The last point, and probably the most important one for the current price action, is this oversized outside bar. That long lower wick shows the bulls stepping in with real strength, but in the end we got no upside follow-through from that outside bar at all.

So the takeaway is that bulls and bears are locked in a balanced tug-of-war right now, and that's exactly why, until we get a clean breakout, it's smart to trade this as a sideways range. I'd already explained to the community that the real direction only gets decided once we get a clean breakout. So how did the previous day actually play out?

During the Tokyo session, heading into the close, price broke out downward from this sideways range right here. After that downside breakout, the bias flips bearish right there, but actually pulling the trigger on a short was pretty tough on the 1H chart alone, given how little confirmation you had. That said, what I was really watching wasn't just this breakout move on its own — I'd also pointed out that you needed to keep a close eye on the New York session open.

And right on cue, a pullback formed exactly at the New York open, giving us that textbook rally-selling setup we'd been waiting for. Measuring from the high of that pullback down to the most recent low, price has dropped a full 90 dollars, which works out to roughly 909 pips, moving exactly the way our scenario had mapped out. So in today's community briefing, the key point is this: an upside break above that descending trendline I mentioned earlier flips the bias bullish, and if it succeeds we lean long.

I've also laid out the specific price levels that become the next focus after that breakout. In the current market, this level is acting as the reversal point that leads into the next swing, and I'll walk you through that pattern. On the daily chart, this candle is likely to close bearish, so you need a clear trigger ready to flip quickly to a downside bias.

Today I walked you through the exact criteria for flipping to that downside bias and the pivot for reassessing it. That wraps up today's gold session.