Gold in downtrend — does 4,161 break or snap back to 4,254? | XAUUSD Sep 28

Hi everyone, this is Daniel, an active prop trader. Today my bias on gold is clearly to the downside. Since last time, price failed to break above the previous day's high, and just as I laid out, it dropped 612 pips as it came back down to test the low set during the Tokyo session.

Right now both the Tokyo and London sessions have kept up a strong downtrend right from the open, so until we get a clear reversal confirmed I want to keep favoring the short side here. So the big question is whether this downtrend just keeps rolling, or whether we get a climactic reversal into the New York session, and that's exactly what I've been watching here. Alright, let's jump straight into the daily chart as always.

Last Friday's daily candle actually closed as a bullish doji, right at that key level. As I laid out in the daily scenario, since the prior candle printed as a bearish doji, we should expect a sideways range to form first, using that candle as our reference baseline going forward. As for the daily direction, I explained that we prioritize whichever way price breaks out of this doji candle, and once the breakout is confirmed, we wait for a breakout pullback before targeting fresh highs or fresh lows — that was the broad strategy I laid out.

Right now, exactly as the scenario laid out, the daily chart closed while still holding inside that sideways trading range we mapped out. Since price appears to have broken downward against that doji-like bullish candle, the structure now looks like a bearish breakout is underway, so my bias here is fundamentally tilted to the downside for now. Now on the daily chart, we're watching the lows of this candle and this one here.

These levels tend to act as key zones on a breakout-pullback, so if price tests this area early on the daily chart, I think that gives us a solid short entry opportunity right at the daily timeframe level. That said, if we close with a big bearish candle like now and the momentum keeps building, then even if we wait for a pullback all the way down to the low of this recent bearish doji, I don't think that really gives us a clean, high-quality short entry here.

When a downswing has already run this far and then bounces, that rebound often flips into a full uptrend, so in cases like this it's tough to treat it as a solid short-entry opportunity at all. As I mentioned earlier, I think it's better to confirm a breakout-and-pullback setup at an early stage, since that gives you a much cleaner and more reliable entry. Let's look at the 1H chart now.

On this timeframe, the red line here marks where the chart stood last Friday, at the exact moment I ran that community-only session for our members. Let me walk you through what I actually covered in that session, pulling out just a few of the key points here on YouTube. First off, price was testing the previous day's high right around here, and the London session had shaped up into a clean trend-day structure.

So heading into the New York open, I explained that we'd keep holding this bullish bias, expecting the upside momentum to continue. And I also walked through the bullish target: if price managed to break out above that previous day's high, I said I was eyeing the 4326 area right around here as our upside objective to aim for. On the bearish side, my scenario was for a failed breakout above that previous day's high.

And if that failure played out, I explained I was expecting price to come back down and retest this level right here, the low that had been set earlier during the Tokyo session on that same day. We were dealing with an uptrend where you could draw one of these weaker channel lines. But ultimately, once the New York session opened, my scenario went even further — I'd laid out this strong drop driven by the retrace, walking through exactly how I expected price to fall from there.

Now, on how I actually arrive at this analysis — which price moves I read to build my scenario — I picked out several key candlesticks worth watching and walked through the technical breakdown inside our community. Since that update, we first confirmed an upside breakout above this bullish doji candle, but then the breakout pullback failed, and price came back to test the same low a second time. When another bullish doji formed right there, the very next bullish candle delivered a clean follow-through to the upside.

But that high didn't lead straight into a clean upside breakout. Instead, price formed an inside bar, the doji candles overlapped each other, and it all settled into a small, tight sideways range right there. Inside this small sideways range, the bullish candle tried to break to the upside, but the next bearish doji failed the breakout, and price turned back to test the lower boundary again.

This move back down to retest the lower boundary is really a classic textbook range play. When an upside breakout fails, price tends to at least come back down and retest the lower boundary of the range, and that's the likely path here. Ever since this bullish doji candle formed, the price action has clearly shifted, and this candle was the bullish doji that printed an hour before the London session open.

At the London session open, price broke above this doji candle, then formed another doji, and broke above that one too. This pattern of repeated upside breakouts above each doji kept repeating right up to broadcast time, so the uptrend was continuing in a relatively strong state. Given this price action, my base case was staying bullish, but flip that around: the moment the upside breakout above the prior day's high failed, all those bulls who'd pushed in with such strong momentum become fuel for the next downswing.

So I explained that, at the very least, we'd likely come back and test the low made in the Tokyo session. So what did gold actually do after that? It failed to break above the prior day's high and printed a bearish reversal candle.

Exactly as scripted, it dropped 61 dollars, 612 pips, straight back into that Tokyo session low, and from there the bias flipped bearish. Today it gapped down and opened bearish, so we've got a clean downtrend right off the open. And zooming out to this week, at this point in time gold is already down a massive 124 dollars, 1245 pips.

For today's Trading Lab members, I've laid out three key points to frame the trend and the scenarios ahead. Both the Tokyo and London sessions kept a strong downtrend running, and the bias right now stays bearish. The pullbacks have been weak, so for now I'm prioritizing trades in the direction of the trend.

Heading into the New York session, stay alert for a possible reversal or a drop in momentum. Since today's opened with a strong downtrend from the bell, I built the whole scenario around that. That wraps up today's gold session.