Gold at 4,416 breakout test — extend or drop back to 4,367? | XAUUSD Aug 17

Hey, this is Daniel, an active prop trader. Gold looks bullish short-term today. Since last time, price broke cleanly above the descending trendline, and from the low right after that broadcast, gold has now rallied by a full 551 pips.

Right now we're testing an upside breakout of the recent sideways range. If it holds, the rally continues; if it fails, price likely falls back into the range. Today I walked you through the price action after the breakout and exactly when to flip your bias to the next directional read.

Alright, let's dive straight in and start with the daily chart. On the daily chart, the scenario I laid out last time really breaks down into these three main paths. First off, after making a higher high and then a lower low, we've got what looks like a reversal candle here, so from now the situation really favors a price-based correction against the bigger-picture uptrend that's still in play.

Also, as a baseline, last Friday's daily candle looks very likely to close as a bearish candle, so that's the base case we're working from here. On the other hand, I mentioned the scenario where if we get a bearish candle, or a bearish candle with a small real body, then this candle has a high probability of acting much like a doji, essentially functioning as an indecision signal here. As it turned out, last Friday's final daily candle closed as a doji, effectively a doji formed by both the bulls and the bears.

So this bearish candle ended up acting much like a doji, essentially neutralizing that downside pressure. On the other hand, the follow-through to the downside stays weak here. Given this backdrop, and the way we formed a clean reversal candle here, both of these candles are basically acting as our reference candles, so from here there's a high chance we build out a sideways trading range next.

Right now, if anything, the recent upswing carried really strong momentum, so I'd say the picture favors an upside breakout, and that's the scenario we should lean toward from here. That wraps up the daily chart, so next let's move on and take a look at the 1H. As for the 1H chart, our last members-only session is right around this red line here.

The candle at this red line was already forming, and right at that point I gave our community members exactly the kind of breakdown I'm about to walk you through now. Here on YouTube, I want to pull out a few of the key points and show you exactly what I was breaking down just for our community members. First, at this red line the price was attempting an upside breakout of the descending trendline, so at that point my bias was firmly to the upside.

And if that breakout failed, given the setup on the daily chart I just mentioned, we were in a spot where downside follow-through comes easily, so I explained you should flip your bias to the downside right away. And I also walk through the price action step by step, showing you exactly how I arrived at that decision. So what I was breaking down there was the descending trendline that price had been moving along, along with the descending channel line, and I gave my read on all that internal price action inside it.

First, right here we get a doji, and that breakout is confirmed by a breakout pullback, plus a clean follow-through candle right after the breakout. After that we get at least two signs of a reversal, right here and here, and on the second attempt that bullish reversal succeeds, forming an upswing that pushes back up to make a return high. Tracking this move, we get a doji right here, and price then reacted to that doji's breakout.

This lines up perfectly with the measured move, where that doji's range matches the width of the following upswing. This reversal point and the swing high on the pullback are forming a really clean, textbook setup that's easy to read. Looking back, the failed breakout of that bearish doji candle set up the reversal zone, and price then rolled over and pushed lower from there.

Price broke out below the recent low, so we've now got a clear downtrend structure forming here. After price broke out below the rising trendline we'd been using as our reference, the pullback that followed set up this clean selling opportunity right here. I think that gave us a really strong sell signal here.

Now that this downtrend has formed one clear wave, we can connect these two points and draw the downtrend line here. Looking back at the earlier move and this reversal candle, by applying a line at the very same angle here, we can draw the descending trend channel line. Against that backdrop, the downtrend that had formed was moving along inside this channel line the whole time.

At broadcast time, the first reversal was tested here, then we got a second test too. From here, the setup basically points to an upside breakout above this descending trendline, so that's what we're expecting next. After this breakout, the next thing to watch is whether price can push above the session high set during the Tokyo session that day.

That's the key focus. I explained that if this breakout succeeds, the bullish bias stays intact, and we could reasonably expect the upside to keep going at least until the New York session opens for trading that day. So how did gold actually play out afterwards?

The bullish swing kept running well past the broadcast, and price pushed higher with real conviction, cleanly breaking out above that descending trendline just as we'd expected. If you count from that low at the time of the broadcast, price kept climbing all the way into the New York session open, and measuring up to that opening high, we've confirmed a full 55-dollar move, which converts to a solid 551 pips to the upside. The move played out exactly according to our scenario, right on plan.

For today's market action, in the community-only broadcast I laid out both a bullish scenario and a bearish scenario, and I'm walking through everything using these three key points. The first point covers why I'm short-term bullish, and as I said at the start, gold today is short-term bullish. Here's the reasoning, and even after new highs today I'd stay alert for a possible reversal.

So what price action signals that reversal call? Today's theme was whether that sideways range breakout succeeds or fails, and then flexibly switching our bias off the momentum we see once that break actually plays out. Recently it's looking like a pullback-style move, so extending forward, keeping a bullish bias here still looks like the right read. That wraps our gold update for today.