Gold testing range low 4,300 — breakdown or bounce to 4,396? | XAUUSD Sep 1

Hi everyone, Daniel here, an active prop trader. My bias on gold today is to the downside. As expected from last time, price formed a rally high and then dropped 484 pips, but it failed to make a lower low, so the market stayed stuck in a range throughout the whole day.

Signal candles inside a range lack any real edge, so the plan is to trade off the range highs and lows, and if price breaks out, flip your bias to that direction. Today I'm sharing this early, exclusively for our community members. Right now price is actively testing a downside breakout of the range, so let's dig into this in detail, starting as always with the daily chart.

On the gold daily, yesterday closed as a bullish candle that formed a doji. For the daily scenario, this is exactly what I laid out in yesterday's video, if you recall. First, we've broken below this doji to the downside, so the bias is now tilted lower.

And basically, if the market keeps carrying this momentum and continues to fall, there's a high chance it comes down to test the lower boundary of the sideways range, built off these two candles I've marked in the gray zone. And as I mentioned at the start, yesterday's daily candle closed as a bullish doji. So for now, the first thing we should be thinking about is that a sideways range is likely to form, built off these four price points from that daily candle as our reference.

If this candle breaks out to the upside, then following standard theory, we'd very likely see a retracement equal in size to the width of that doji candle. On the flip side, if we break out to the downside, the same logic applies — that doji width projects as a measured move. But as for the key level, it's really this lower wick here, right around that big bullish candle that likely marks where the bulls launched their move.

I'd expect price to come back and test that zone. That's it for the daily chart, so let's drop down to the 1H and take a look. On the 1H, the last stream to Trading Lab members happened right around this red line here, where a small bullish candle formed a doji, and that's when we went live.

So here's a recap of exactly what I covered in that session. On YouTube I'll narrow things down to just a few key points and walk you through them. On the 1H the downtrend was still intact, so my overall bias was pointing to the downside, and I told you to stay bearish there.

Recently we also saw a price action that looks like a bullish reversal. We do have this bearish candle with a long lower wick clearing more than 50%, but I told our members that a single candle like this isn't really enough to confirm the strength of the bulls, so we shouldn't overrate it just yet. So my base case from here is that the London session forms a lower rally high before rolling back over.

The prior day's high and the Tokyo session high matter here — that Tokyo high especially was the exact trigger point for the sharp sell-off. Levels like these tend to act as key inflection points, working as the upper boundary of the range, and that's exactly why I flagged them as areas worth watching closely. On the other hand, if price breaks out above this Tokyo session high, that move would put us right back into a test of the previous day's strong downswing, so we'd be pushing straight into that zone again.

Basically this is a downswing where the bears pushed really hard, so around these key levels fresh short entries come in easily, and that's exactly why I was saying the price action from here gets much harder to read and predict cleanly. Looking back, there are several points worth flagging, but the main one is this whole sequence of downswings unfolding here. Looking closely, first we get this massive outside bar that's also a doji forming right here, and then the breakout candle prints just after it.

Effectively, the breakout pullback and the follow-through both fire off within that same candle, which builds a really strong, momentum-driven downswing right here. In the end, that single downswing just kept extending all the way down to around this level here. Sure, you could read this as a time-based correction, but sellers stayed firmly in control the whole way, so treating it as one single swing works just fine here.

With momentum this strongly bearish, a single candle reversing the whole move is unlikely — you'd need a really long lower wick or a big bullish body to justify calling it a reversal. Since it's very unlikely this acts as a reversal candle, the base case stays bearish. And even if price does bounce, this level can act as a pullback zone, so another sharp leg down was very much on the table — that's exactly what I was explaining here.

One thing worth flagging: yesterday was August's final trading session — a month-end session — so I'd told everyone to play it cautiously and stay disciplined around the close. So how did gold move after the last stream? Right on script — during the London session it carved out a rally high, then dropped roughly 48 dollars, about 484 pips, playing out exactly the scenario I'd laid out.

In the end price couldn't take out the prior low, so as of yesterday we're still stuck in a range. But there's been no deep pullback either, and the bears clearly remain in control of this market. As always in today's early release for our community members, I walk through both the bullish and bearish scenarios, covering three key points for each side.

The first key point is that yesterday's range is still holding, and right now price remains inside it. Second point, watch for reversals inside the range and price action at the upper and lower bounds. Final point: I said to watch the direction once price clearly breaks out of the range.

Right on cue, price dropped hard just as I called it, and now it's testing the lower bound of this range. We've still got about 16 minutes until this 1H candle closes, and I want to point out the real range boundary I flagged earlier for our community right here. This is a really common setup.

Right below a key price zone, price forms a doji, builds a fresh breakout point above it, and then drives into a big breakout move from there. We're seeing a textbook pattern play out exactly as expected. That's what I shared with you today, and that wraps up today's gold analysis.