Gold breaks prior-day range — hold above 4,341 or fall back to 4,317? Sep 16

Hi, this is Daniel, an active prop trader. My bias on gold is bullish today. Since last time we kept seeing a downswing, dropping 184 pips right on target, and then we got exactly the bounce our scenario called for, right from just above the previous day's low.

Structurally this plays out just like trading-range theory predicts, with price testing that first range as it should, and the rebound that followed rallied roughly 490 pips. Right now price has broken above the previous day's range, signaling the end of time-based consolidation, so I'd like to enter long targeting a breakout-pullback move off the previous day's high. The question is whether this uptrend keeps pushing higher from here, or whether the breakout fails and price falls back into the previous day's range.

That was my focus. So let's dive right in and take a close look at the daily chart. Here's the gold daily chart.

As I laid out yesterday, my base scenario was that the pivot sits inside this sideways range formed by these two candles, and from there, Since the most recent candle formed a bearish doji, I mentioned we'd likely see a sideways range build off that candle, using it as our reference for the structure ahead. Now if we actually track the price action that followed, the daily chart closed as a bearish doji, and that candle sits perfectly inside the previous doji, so exactly as our scenario called for, the sideways range simply carried on.

Now looking ahead at how the daily chart develops, what I really want you to notice is that this candle is sitting inside the previous one. Against that prior doji, volatility is clearly contracting, and because of that, a range breakout is now far more likely to happen after this candle than it was the day before. We'll look at the 1H chart shortly too, but for now an upside breakout looks more likely, whereas if price instead breaks below that level, then here's what happens.

On this, given the sequence of price action we've seen up to here, it's likely just a short-term sharp drop with no real follow-through on the daily chart. That's because the price action leading up to here always broke below the doji lines and slowly ground lower in a grinding decline. Since momentum never really picked up after the breakout there, On today's daily candle, if price breaks below the low, there's a good chance the move won't have any real staying power.

Now let's walk through the price action on the 1H chart. The community-only stream from yesterday was right here at this red line, roughly two hours after the London session open. Let me walk you through what we covered inside the community, focusing on just a few of the key points from there.

First off, right now, at the time of this recording, price broke down below the Tokyo session's trading range to the downside. From the recent price action, we were clearly inside a downward swing that carried its own trading range along with it. So while our overall bias was leaning completely bearish, with the trend fully to the downside, One thing worth watching was the previous day's low, right around here, since we were near that low and the daily chart was prone to slipping into a range.

Rather than chasing it from here, I told everyone to keep holding periods as short as possible and to stay alert for a bounce against us. And I also walked everyone through this whole sequence of price action in detail. Since the broadcast two sessions ago, price broke out above the doji to the upside like this, and from there it's basically stayed stuck inside a range, chopping sideways without any clear directional follow-through.

This zone here could start acting like a double top, and even if it does end up functioning as that double top pattern, After that, the follow-through zone just below the previous day's low becomes the major level to watch closely here. Either way, a rebound was likely to come through at an early stage here. And zooming into this double top, the first upward swing was this climax-style bullish candle right here.

That's the textbook buying climax candle right there. After the upswing runs for a while, near the very top you get that big bullish candle forming. A bearish reversal candle forms there, then price flips over and reverses down.

So after a swing has run for a while like this, I want to stay cautious on a big bullish candle. This also ties into why I stayed bullish today. As long as the breakout candle is a big bullish one, the follow-through breakout tends to run smoothly, so personally I see it as a reliable, trustworthy candle here.

The same logic applies right here too. We can confirm price dropping across three candles here. At the end of the down swing we get a big bearish candle.

This can be read as a classic selling climax candle here. Then a bullish reversal formed. A double bottom formed and price retested that same high again.

Right here, price was clearly forming a full sell setup for us. It built a sell setup by testing the recent high, the high made during yesterday's NY session. Personally, I'd place a stop sell just below this big bearish candle's low.

After that, a downswing formed, and that was the chart at yesterday's members-only stream. Looking inside, we can see doji candles sandwiched in between there. This most likely formed a downward-drifting trading range, with the range gradually stepping lower over time.

With that shape in mind, let's now check the actual price action against it. First off, right here, just as I expected, price dropped about 18 dollars, roughly 184 pips, and then reacted. As expected, it bounced right around the prior day's low without breaking below it.

As of yesterday, we confirmed a move up of about 49 dollars, roughly 490 pips, exactly in line with the scenario. And this level where the move stalled sits at a very clear spot too. With a trending trading range, price very often comes back to test that first range in the end.

And yesterday's bounce ended right at this doji's high too. So price is moving exactly as you'd expect within this typical range pattern. Now, for today's exclusive content shared with our community members, I walked through both the bullish and bearish scenarios across these three key points.

The first point is that price broke out above the range, so right now the overall bias has flipped to bullish. Second point: the key thing I'm watching is whether price can finish this pullback and push higher again. Last one: only if price falls back into the range do I consider flipping to a bearish bias.

So there's really no need to rush into a bearish bias just yet. Looking again at the recent price action, near the highs it's forming what looks like a bearish reversal candle. With momentum this strong, it didn't turn into a climax candle after all.

The price action confirms the breakout looks set to push through cleanly. We've now spent over six hours consolidating inside this candle. Let's watch closely which way this candle breaks and gauge whether the rally can really hold up. That's it for gold today, everyone.