Gold at 4,294 support vs 4,322 resistance — breakdown or fakeout? | XAUUSD Sep 22

Hi, this is Daniel, an active prop trader. Right now my bias on gold is to the downside. Since last time we've stayed in a trading range, and I've confirmed two bounces off the range's lower boundary, one at 328 pips and another at 369 pips.

After that we broke out below the trading range to the downside, and right at the London session open today we saw a sharp drop confirming that move. So the question is whether this downtrend keeps going, or whether after that recent sharp spike we close back above the previous day's low and the Tokyo session low on the 1H chart, forcing us to flip our bias to the upside. That's what I want to focus on here.

So let's dive right in and start with the daily chart. On the daily chart, here's what I flagged as of yesterday. The recent candles keep pushing the highs up, so the bias is basically bullish.

But my concern was that the candles overlap heavily and each higher high is only marginally higher, which tells me the upside momentum is clearly fading here. So after that, I explained that even though we saw a breakout-pullback setup that rejected the prior day's bullish candle, if that setup ends up failing, we'd need to flip our bias to the downside and start looking for selling opportunities instead. Looking at the current price action right now, this really is a situation where you could read it as the breakout-pullback setup having failed.

So if this candle closes with a bearish body left behind, that confirms the breakout-pullback failure and flips my bias to the downside. If that plays out, this doji candle right here becomes the key reference bar defining the whole range going forward. That said, it's sitting in an awkward, half-baked spot, so we'll need to map out these key levels again from scratch.

First, the open of this bearish candle. Then the low of this bullish candle. And if price keeps dropping, most likely the low of this doji here — all of these are set up to act as key levels going forward.

The most likely candidate is the low of this bullish candle, which marked the starting point of that very strong rally we saw earlier. This zone here is the level most likely to act as a key pivot point going forward. If it breaks lower, there's still plenty of room down to each of the key levels, so some further downside was actually the easier scenario to keep expecting here.

Right after I wrapped up the early release for the community, price tested the open of this bearish candle, and now we're seeing a strong bounce confirmed right off that level. From here, the odds of a fakeout have risen considerably, so in the short term the price action has flipped into a read that's genuinely tough to call. Next, let's move down to the 1H chart and check that timeframe.

On the 1H chart, what I want to point out is that yesterday's community-only stream happened right around where this red line is drawn, so that's where I did the members-only broadcast. So for the YouTube version, I'll walk you through what I explained back then, but focused on just the key points that matter most. First, looking at yesterday's setup, what we had forming on the chart was a large trading range building out here.

As for exactly which part of the chart I'm pointing to, if you look carefully, it's right here. The high of this doji and the recent swing low sit right around here. With a trading range of this width forming, at the time of broadcast we saw a bullish reversal candle right here, so the question was whether we'd get a confirmed bounce off this level.

I also mentioned that this was a situation where we should treat trades as playing out inside the range. On the other hand, if we shift to a bearish bias, that only becomes valid once price breaks below this low here. And for that setup, I explained that we can start looking for shorts once we get a breakout, then a pullback, or after price works through some time-based consolidation.

I also want to walk back through the recent price action and hit a few key points. First we got a downside breakout of this doji, then a breakout pullback right off that same doji level, and that's exactly where the second downswing formed. The one that really acted as our bullish reversal candle was this bullish doji, pushing up the same distance — a clean V-shaped recovery.

This uptrend had been running in a very clean, easy-to-read way, so a genuine reversal would need an obvious lower high, or at least a second test of the prior high first. And with this down-swing here, each candle overlaps heavily, so at the very least a second test back up was one of the most likely scenarios we could realistically pencil in at that point. Then it printed a bearish reversal candle, forming a double top, and the first down-swing came right here, bouncing off a long lower wick.

But here's the thing: the pullback entry never got any additional fills, so price just stalled out and printed this bearish reversal candle instead. Yesterday's picture was this: after that second down swing formed, gold printed a bearish reversal candle right at the bottom of the trading range. So how did gold actually move?

Even after the stream, the trading range held; it tried to break lower once, but it printed a long lower wick and got rejected right there. There was no real breakout, no proper pullback setup, and no time-based correction either, so in my view there was simply no reason to go short here — no valid trigger at all, which means this was in no way a fakeout or a trap. While this trading range kept holding, exactly as the scenario I laid out predicted, we've now confirmed two clean bounces off the level.

The first bounce came right from here, rallying $32, about 328 pips, then the second one played out over here. From this bullish reversal candle right here, we saw price rally $36, roughly 369 pips, in that next leg up. For today, I walked our community members through both the bullish scenario and the bearish scenario in detail.

I broke it down into three key points. Selling has continued from London; bias stays down. Watching how price reacts on the bounce off recent lows.

If we clear that key level, I'd consider flipping to a bullish bias. One key level I'm watching is the previous day's low and the Tokyo session low. If we break through both of those levels, I'd shift to a bullish bias and look to enter on any breakout-pullback setup.

Recently, the London session has been showing a slight downtrend right from the open. I went short twice and already booked both take profits. I was busy recording a separate community-only video, a hands-on practical edition of my trade scenarios.

Sorry for the slight delay in getting the stream started. The bounce is strong and gold is spiking hard right now, so I want to keep my view flat and neutral here. That wraps up today's gold update.