Gold at 4,256 support — break 4,304 or slide to 4,244? | XAUUSD Sep 25

Hi everyone, Daniel here, your active prop trader. On gold, my short-term bias is to the upside right now. Since last time we saw a breakout pullback into the range, and just as I expected, price dropped from there, falling roughly 40 dollars, about 401 pips.

Right now the down-swing has finished and we've had an uptrend running since the London session. The key focus lately was whether price could break above the previous day's high, and for the moment that upside break has succeeded. The big question I broke down is whether this cleanly breaks out above the previous day's high and keeps running, or whether we reverse from the New York session and drop back down to test the lows made during the Tokyo session.

So let's jump right in and go through the daily chart in detail as always. On the daily, the candle closed as a doji following the prior day's bearish candle. As for the daily scenario I flagged in the last session, price had just broken out to the downside below this bullish doji candle right here.

And since it printed as a strong trend candle, we could reasonably expect follow-through to the downside, so I was leaning bearish here overall. Now for shorting on the daily timeframe, the key here is the breakout of the doji candle and then the pullback back into it — that's really the trigger. That said, by the time of the community-only stream, the high had already retested the low of that broken-out doji, so honestly, the clean chance to enter that short had already passed.

As for the near-term downside target, if this follow-through keeps pushing lower, treating that doji as a measured move gives us the projection. Roughly speaking, the situation set up such that there's a high probability of a move lower, dropping all the way down to the round number around the 4200 dollar level. On the flip side, in the opposite scenario, if it doesn't run lower, then today's daily candle likely closes as a bullish candle, or as a bearish doji-style close right around here.

If that plays out, price should slip back inside this doji again, and from there it becomes easy to form a trading range, which is exactly what I was talking about earlier. In the end, just as I said, we closed on a bearish doji here, so the base case from here is that price rotates back up into this bullish doji and once again settles into a trading range as this setup develops. And of course, since a doji has formed here, this four-price zone tends to act as a key level going forward, so as a base case, I'm expecting the trading range to develop and play out inside the boundaries of that doji candle.

As for entries at the daily-chart level, my read is the same here: this is a situation where we should wait for a clean breakout first, then look to enter on the pullback that follows. That wraps up the daily chart, so now let's move to the 1H. On the 1H, my last community-only session was right around here, at this dotted red vertical line I've drawn on the chart, so that's roughly where I ran that stream for members.

So let me pull out a few of the key points from that session and walk you through them here on YouTube. At the time of the session, the downtrend structure was still intact, so my base case was staying with a bearish bias for now. At this stage price had already broken below the range, so I explained that only if it climbed back inside the range, or more importantly pushed above this recent Tokyo session high, would I even start considering a switch over to a bullish bias.

Until then, the downside case stayed in play. Now looking at the most recent action, right after that downside breakout of the range, notice that the trading range built during the Tokyo session got broken to the downside just as the London session was opening. Given that setup, I pointed out there was a strong chance we'd see either a clean trend day or a trading-range day developing from here.

That said, from here I was actually pretty skeptical that price would just keep dropping cleanly. And the reason is simple: the downside target you'd project from that Tokyo-session trading range had already been reached. So for the community members, I explained that even if the bias stays bearish from here, you really want to wait for a pullback first before jumping in short.

And the real focus here wasn't so much how price fell, it was how it bounced back. Because we were in a setup where pullbacks come easily. My point was this: if this turned out to be just a time-based correction, then a trend-day style move was likely to keep running.

But if instead it became a price-based correction, then you'd more likely get a trend structure built around a trading range, a proper range in other words. I flagged that we should watch for a strong recovery, either during the New York session or later in the Tokyo session that follows. And inside the community, I've been picking out the most noteworthy price action and walking through it in detail for our members there.

The main focus at the time of yesterday's session was really the pullback and that leg lower we saw develop. With the downswing still in play, price kept moving since the last video, and while we did form a bullish reversal candle here, even after clearing the highs there was no strong follow-through at all. Within this kind of price action, the bulls still couldn't take control, and I think the area just below the swing low set up as a clear entry point for the shorts here.

And in fact, once that doji set up the trigger, we got a strong breakout to the downside, so any bulls who carelessly went long off this price action got their stop-loss orders swept in too, and price drops hard from here. As for the downside follow-through, we're forming dojis while stair-stepping lower, so this is really a kind of time-based consolidation, but with the bears clearly in control, any time the bulls try to push in they just get rejected as wicks and knocked right back down.

Basically, upside follow-through just wasn't happening here. Then we print another big bearish candle and drop further, and only at this point do we finally form a large-bodied bullish doji. We saw three bounces earlier, but only on this third attempt do the bulls finally show some real strength here, and from there price shifts into a sideways range.

The trading range built during the New York session carried straight into the next day's Tokyo session, forming another range. At the London open we got a breakout, then a breakout pullback formed, and finally price delivered clean follow-through to the downside. That said, we were still overlapping candles of the same size, so at that moment it was probably hard for direction to emerge.

That kind of price action was exactly what we were watching closely here. So how did gold ultimately end up moving here? Right on script, as you'd expect.

The pullback we called kicked in almost immediately after we posted the update. After breaking out, price pulled back into that trading range and retested the lows, dropping roughly 40 dollars, about 401 pips, exactly as we mapped it out. Since this was a pullback in terms of price range rather than a deeper move, in yesterday's scenario I noted there was a strong chance of a big rebound during the New York session or the following Tokyo session.

Price has now pulled all the way back inside the trading range, and on the most recent 1H candle it's even testing a breakout above the previous day's high. So overall, things have played out pretty much in line with our scenario. For today's Trading Lab members, I've broken the analysis down into these three key points.

The upswing is still going, so heading into the New York session we're keeping a bullish bias. The next key thing to watch is whether price can clearly break above yesterday's high. As for the New York session open, depending on how the structure develops from here, we really need to stay alert for a possible sharp drop.

For our community members, I laid out specific target highs and exactly what price action to watch for at the New York open. That wraps up today's gold analysis for you all. Thanks for watching.