Gold at range top: reject to 4,389 or break 4,434? | XAUUSD Sept 10

Hi everyone, Daniel here, an active prop trader. Gold is bearish short-term today. Since last time, the doji I was watching broke out to the upside, flipping into an uptrend exactly as my scenario called for.

It then formed a pullback and rallied about 478 pips from there. Right now we're trading inside the range defined by that huge doji outside bar from yesterday's New York session, and since price is sitting up near the range's upper edge, my bias stays bearish short-term, as I mentioned. Given this kind of price action my short-term bias leans bearish, but if we break above this level, flipping to a bullish view is absolutely on the table here.

Will price reverse right here off the top of the range, or break out above it and swing back into a full uptrend? That's the key focus in today's breakdown. Alright, let's dive right in and take a close look at the daily chart first.

On the daily chart, the scenario I laid out yesterday centered on this: we've broken below this small doji candle to the downside, so downward follow-through was likely to continue, which is why I was leading with a bearish bias as the main view. That said, the development to watch out for is that this breakout could simply fail, and price is quite likely to fall back into a sideways range built off this doji candle as the reference bar. If price does come back, the textbook scenario here would be a retest of this prior high before anything else.

Also, given this kind of price action, I mentioned earlier that if price comes back, this range will keep going, so we basically lose any sense of clear direction here. In the end, the daily chart closed as a bullish doji candle, and that basically wiped out almost the entire gain from the previous day. So from here, this bearish doji candle will likely act as the reference bar for what looks like a sideways range, and given the nature of a range, price is quite likely to come back up and test its high.

On the flip side, keep a close eye on yesterday's low. You need to be careful if we get a downside breakout of this doji, and what I'm watching most closely, since price is already sitting right near it, is the case where it pushes above the high first and then rolls over and drops back down. On this scenario, once we see this bullish candle, price tends to drop hard as it sweeps the stop-loss orders from those daily-level long positions.

So this kind of move is definitely on the table, and that's why I wanted to lay it out here as one more possible scenario for you. Alright, let's move on now and take a look at the 1H chart. As for the 1H chart, yesterday I ran a members-only community session right around where this doji candle confirmed, and walked through it there.

Here on YouTube, I'll briefly walk you through what I explained in that members-only community session, scenarios included, and just keep going from there. So, the main takeaway from yesterday's members-only community session was this doji line right here. The direction this doji breaks is exactly what flips our bias, and that's the key reference I walked you through.

The main scenario is a break to the upside, and if that happens we get a clean breakout above the most recent swing high on the chart. That confirms the shift to an uptrend under modified Dow theory. If we get that setup, we flip to a bullish bias and start looking at getting long here.

On the flip side, if it gets rejected, this becomes a lower high against the downtrend, so the bias turns bearish. I've been framing it all around that doji. As always, I'm walking you through the whole price action process that led into forming this doji.

First off, look at this range here. The key from the prior day was this range, where a sideways range formed off two anchor candles here — this bullish reversal candle and this doji sitting right beside it. The internal price action was textbook range behavior too — after testing the lower bound it swung up to probe the upper bound, then dropped back to the lower one, ticking along with that steady rhythm you typically see inside a range.

The character of the move shifted on this candle — momentum clearly picked up, and on the 5-minute chart this was a bull flag. We got an upside breakout that pushed through, and the breakout pullback completed too, but the next candles all overlapped and formed a sideways range again. Starting from that failed breakout on the doji here, the FBO, price built a downswing, and after a bit of time-based consolidation, it broke out to the downside once again.

Within that price action, we finally saw a reversal low form, price turned back up, built an upswing, and right at that point a bullish doji candle was printing here. This was also the previous day's range, and without reaching the upper boundary of that range, price built a sell setup right here, so whether it could break above this high became a really critical point. So the setup was really about using this doji as our reference to judge which way the market wanted to go next.

Now, how did yesterday's market actually move? After the stream, price broke through this high and pushed the doji into an upside breakout. What followed looked a bit like a sell setup, but instead of judging that candle in isolation, we always tell our Trading Lab community members to read the price action as a whole process.

And in fact, what came next was a downside follow-through, but it turned into a genuine pullback, forming a buy setup, then price kept posting higher highs and broke out to the upside. As for the size of this move, counting from the pullback after the broadcast up to this high here, we got roughly a 47-dollar range, about 478 pips, rising exactly as the scenario laid out. For today's community-exclusive breakdown, I'll walk through both the bullish and bearish scenarios across these three key points.

First point, we're near the top of a big range, so short-term I'm bearish. Second point, which way we break this range is the key that decides the next direction here. Third point: if we break clearly to the upside, then I'd seriously consider flipping to a bullish bias here.

Recently I sent out a community-only broadcast right around where this breakout failed and that doji candle formed, and I called it out there in real time. As expected, this level gets watched as the top of the range, and after that you can clearly see price reverse and drop lower. That wraps up today's gold update.