Gold at 4,624 support — bounce to 4,696 or breakdown? | XAUUSD Aug 26

Hi everyone, Daniel here, an active prop trader. My bias on gold today is bearish. Since last time, price played out exactly to plan: from the London session into the New York open it dropped about 481 pips off the rally high, then formed a buy setup, and from there it rallied roughly 684 pips.

The big question today is whether this drop keeps running, or whether the breakout fails and price grabs back that bullish momentum and pushes higher. That's the key focus. So let's dive right into the daily chart in detail.

Gold's daily candle from yesterday closed as a bullish doji, right on the line. First, let me recap the daily-chart scenario I laid out in yesterday's video. The previous candle printed both a higher high and a higher low, so price is extending upward exactly in line with our bullish bias.

At the same time, if you watch how the candle bodies are evolving, the bullish candles are getting smaller, which tells us the upward momentum is clearly starting to lose steam here. After this kind of price action, I explained that the odds of shifting into a corrective phase from here are clearly rising. At the time of the stream the daily candle wasn't finalized yet, but if you watched the price action closely, during the Tokyo session we were already seeing an attempt to form a bearish candle, so I explained that the current move can be read as a shift into a corrective phase.

If yesterday's daily candle had closed below the prior day's low, I explained that the corrective flow would likely carry over from the very next day's open, and that if we saw a bearish candle body break out below the low of the immediately preceding candle, you'd need to be even more cautious. On the other hand, even if we do get a short-term move to the downside, I still think this can be viewed purely as a corrective phase, nothing more. So how far can we still treat this as just a correction?

Well, I think the reference point is the high made by that bearish pin bar candle right here on the chart. Only once we break below this level would the bigger-picture uptrend actually break down, and right now we're still holding above that point without breaking it. Yesterday's daily candle printed as a bullish doji, which tells us this is more likely to resolve through a time-based correction than a price-based one, and since it still leaves a bullish body intact, that reinforces the same read.

For now the balance of power still tilts toward the bulls, so buyers are keeping the upper hand here. So we're in a sideways range here, and the real direction only gets confirmed once price breaks out one way or the other. If I weigh up the momentum we've seen so far, I'd say the odds clearly favor an upside breakout here, so a move higher looks like the more likely scenario.

Alright, next up let's shift our focus over to the 1H chart timeframe. On the 1H chart, in yesterday's members-only community stream, I walked through this red-line zone, right around where that bullish doji candle formed and set up. Here on YouTube, let me walk you through exactly what I covered, narrowing it down to a few of the key points.

First off, point number one: right now we've got a bearish reversal candle here, and the downswing has continued from there. On the 1H timeframe too, price broke below the low, which flipped the structure into a downtrend, so I was saying our bias here should be to the downside. Looking at this reversal candle, it's a bullish doji, but the upper wick is longer, and right around this low, the moment price broke out to the downside, this candle turned things around here.

This gave us a really solid downside trend candle here. A big bearish candle here, so you can clearly see this was shaping up as a very strong sell setup. Then another bearish candle of nearly the same size followed through, and at that point you could tell the power balance had completely broken down toward the sellers.

The key point I was making is that, based on the London session open structure at broadcast time, we first need to gauge how strong the downward momentum was right after price broke out below this recent doji here. One thing worth watching as a reference is how far each new low undercuts the previous one after that downside breakout. If those undercuts get shallower and it turns into a slow grind down, or if price then carves out a small trading range, I mentioned that depending on how the reversal plays out from there, I'd want to flip my bias back to the upside.

On the flip side, if price keeps that strong downside momentum from the New York session open and just keeps grinding lower, I said we should at least be prepared for a deeper correction, potentially all the way down to the low 4500s. I also factor in the most recent price action as part of my read, so I took a moment to go back over the key moves that really mattered here. The real focus here was this small falling wedge pattern.

I also explained that on the 5-minute and 15-minute charts you can spot this shape much more clearly. And true to theory, after price tested the wedge's origin here, it formed a doji, and once that broke out to the upside, a stronger bullish swing developed off this momentum. After that, a sell setup formed, and following two bearish candles, price tried to reverse with a bullish doji.

But since the range was still in play at that point, I explained that this is the kind of choppy back-and-forth development we were sitting inside of. So how did gold actually move after I posted this? Right at the London session open it formed the rally high, and just as I laid out in the scenario, the timing lined up perfectly heading into the New York session open.

We saw price roll over from that rally high and drop about 48 dollars, which works out to roughly 481 pips. After the New York session open, I want you to focus on how narrow the lower-low spacing became. Each new low was only slightly below the last, and given that tight structure, if the scenario held, a reversal was exactly what we'd expect from here.

It reversed cleanly and rallied all the way up toward the high printed at the Tokyo session open, a solid 68-dollar move worth 684 pips. Here again, price played out exactly the way our scenario had mapped it out. So for today, in the community-only broadcast, just like always, I walked through both the bullish scenario and the bearish scenario, breaking each one down across these three key points.

The recent trend is bearish, so my current bias is to the downside. But the bigger picture is a range, so watch your holding time and don't let positions run too long. If the price fails to break to the downside and upward momentum starts to build, I'll flip to a bullish bias. So I walked through the scenarios for both directions here. That wraps up today's gold analysis for you all.