Gold at 4,395 range floor — breakdown or bounce to 4,470? | XAUUSD Aug 31

Hey everyone, Daniel here, an active prop trader. Today my bias on gold is bearish. Last time I was bullish, but once price broke below this low, which was my key level for flipping bias, it turned into a downtrend.

After a rally-high style price action, gold has now dropped a full 2214 pips down to the recent low we're looking at. From here, the big question is whether gold puts in a pullback and then rolls over into more downside, or whether it breaks out above this key level. I'll walk you through that decision point and exactly how to play it.

So let's dive straight in, starting as always with the daily chart. My last update went out this past Thursday, and since I took Friday off, we've now got two brand-new candlesticks that have formed on the daily chart since then. And looking at the most recent low, it's been confirmed with a big bearish candle closing right there.

As of Thursday, my scenario was this: on the daily chart, even though the most recent candle closed as a big bearish one, we couldn't yet say price had broken out below the low of that doji candle. Given that backdrop, I basically read it as price just testing the low of the doji, and if the range keeps behaving like a sideways range, there was a strong chance it would come back up to test the upper boundary next. On the other hand, since Thursday's stream was built around the Tokyo session move, I explained that if the London and New York opens saw the bears clearly take control, that would easily sweep the stop-loss orders of the Tokyo-session bulls.

In that case, we'd likely see a real downside breakout below the doji, and beyond that, a strong downside follow-through off this big bearish candle would become far more probable. In short, the Tokyo session had a strong tone right from the open, with clear buying momentum. Taking that as the starting point, if we then see the bears seize control at the London and New York session switchovers, the market can easily fall by dragging in the stop-loss orders of the Tokyo-session bulls who bought earlier.

In that scenario, on the daily chart, this recent big bearish candle becomes very likely to be watched as the breakout candle from the doji, opening the door to further downside. I also mentioned that once price breaks below this low, momentum tends to strengthen and the market falls easily from there. Now, tracking the daily chart from Thursday's release up to now, on this particular day both the London and New York sessions saw strong bearish selling pressure come in step by step.

During the London session the bears really tried to seize control, and heading into New York the price action turned even stronger to the downside, pushing lower steadily. This shows the market advancing right in line with the bearish scenario we laid out. As it turned out, that day's candle formed a doji, and the following day price broke out to the downside right below it, confirming the move lower.

As a signal that price was heading lower, that doji played a really clear, easy-to-read role in confirming the downside. Also, about this doji here — I mentioned in an earlier video that if price broke below the high, we'd flip our daily-chart bias to the downside, so right now, on the daily chart, our overall bias has officially turned bearish. And we've also confirmed price pulling back inside the sideways range built off these two base candles.

Today, unless we get a pullback candle forming in this way, the base case is that price has a high chance of coming down to test this area. In other words, there's a strong likelihood it tests the lower boundary of the range, so I want to keep a close eye on how the daily chart develops from here. Next, let's drop down the timeframe and look at the 1H chart.

On the 1H chart as well, price has moved through two days' worth of action, so I want to walk through each part step by step. As of Thursday, the bullish scenario I laid out was this: price first works its way back into the daily sideways range, and from there pushes up to test the range highs. Now for how this whole sequence of price action played out: at that point what I was expecting first was a downside breakout from this sideways range.

And the origin of that downside breakout was very clean too. If we zoom in a bit, you can see a small sideways range formed right off this doji candle as the starting point. This is a textbook case where a failed breakout makes it easier for price to break out in the opposite direction.

On the other hand, after the breakout the move didn't give us a clean pullback. Instead it printed a final low doji, formed a sideways range, then broke out to the upside. Here we get a breakout, then a pullback, then another leg up — two rising swings forming what's basically an ABC-style corrective structure into the move.

Here we build a sell setup, price reverses and slightly undercuts the recent low, momentum fades, and we drift into a flat sideways range. As for the Tokyo session open, this is basically just movement contained inside that range, nothing breaking out yet. We had the open high right here, then price set a low here, dipped just slightly below it, and buyers stepped in after that strong bullish candle — but the breakout pullback failed.

The London session drifted sideways to consolidate, printed a bullish pin bar, then formed a huge outside bar, and from there we got a downside breakout that dragged price all the way down to the current lower boundary. For the Thursday scenario, I'd originally had my eye on this big bullish candle right here. If price broke out below this level, I saw a high chance of a shift into a downtrend, so that's exactly why I was talking about leaning bearish on this move.

Now, if instead price had held this level without breaking down, put in a pullback and pushed higher, I'd have stayed bullish. But in the end, gold broke out below this key level, so my bias has flipped over to the downside here. If you follow what happened next, price never reclaimed this high — it flipped cleanly into a downtrend and carved out a clear bearish swing lower from there.

For now, if we treat this area right here as the swing high for the rally selling, then price has dropped roughly 2214 pips, about 221 dollars, all the way down toward this low, moving exactly in line with the scenario we laid out. In today's Trading Lab community session, I'm walking through these three key points, and as always I'll cover both the bullish scenario and the bearish scenario in detail. First key point: the 1H chart is still in a downtrend, so my base bias stays bearish.

We've had strong downside momentum here, and even after the reversal candle, we're really not seeing any bullish price action, so for now I'm firmly leaning short. Into the London session, I'm watching for a rally attempt and the reaction at the nearest key levels. Third point: even if we push higher, it's likely just a pullback within the downtrend.

It's also month-end, so there's no need to take reckless risk today — I'd rather stay cautious and play it carefully here. That wraps up today's gold analysis, thanks for watching.