Gold stuck in range: break 4,148 or slide to 4,113? | XAUUSD Sep 29

Hey everyone, I'm Daniel, an active prop trader. Today my bias on gold is to the downside. Just like the scenario I laid out last time, the downtrend kept going.

Price formed a rally high at the New York open, and after that we saw it drop roughly 627 pips. Right now, after yesterday's strong drop, a trading range formed heading into the New York close, and we're currently sitting inside that range. As long as price stays inside it, the direction stays unclear, but overall I'm still weighting the recent trend, so my bias remains to the downside.

For today, my focus is on how this range breaks and where price heads next, so that's what I'll be walking you through. Alright, let's dive straight into the daily chart. On the daily chart, gold has closed with a large bearish candle.

Yesterday, my analysis and scenario went like this: the most recent candle formed a bullish doji, right in line with that range-bound tendency I explained a couple of videos back. Normally we'd favor the breakout direction, but by the time I was recording, price had already broken below that doji and printed a bearish candle of similar size, so I told you the bias here shifts firmly to the downside. Now, on the daily chart, what I really want to see next is a breakout-pullback move that reacts against this doji candle.

If a pullback does play out, then these two swing lows here, the lows off each of those doji candles, are the levels I expect traders to watch as key inflection points. That said, if this is going to succeed as a genuine breakout-pullback, I think price needs to reach those levels early rather than dragging it out. So this really means we need a sharp rally in the short term, but if that doesn't happen quickly, the odds are high that price only revisits this level after the trend has already flipped.

That's why, for a breakout-pullback to genuinely succeed, on the daily chart specifically, price needs to test these levels early, not late. On the other hand, if it closes as a big bearish candle, the scenario I mentioned yesterday comes into play: rather than a deep pullback, price would grind lower through a time-based correction. So for today, I think the more natural path is small volatility, price forming a range, and then breaking out to the downside from there.

Basically, I'm working on the view that a wide price-based correction is unlikely to happen right now. With that kind of move in mind, let's drop down to a lower timeframe. The section marked with the red line here is exactly where the 1H chart stood at the time I posted yesterday's analysis for the community.

On YouTube I want to walk back through what I was explaining at that point, including the scenario I laid out, so you can see how my thinking developed from there. First off, at the time of this recording, both the London session and the Tokyo session were forming a rare, clean downtrend day, with very strong momentum behind the move. So my base view was firmly to the downside, avoiding any counter-trend trades.

And in a setup with such an obvious, well-defined trend in play, I explained how I wanted to hold onto part of the position and swing it, letting profits run as far as they could rather than closing out early. That said, with such a powerful downtrend already in place, I felt that before considering any reversal or trend change, both the timing and the price action really needed to line up together.

So my point was this: only after we saw a strong reversal right around the London close into the New York open, or some kind of climactic price move, or a clear drop in downside momentum, for instance the bearish candle bodies getting smaller and smaller, only after confirming that kind of shift should you even start thinking about a reversal or a real trend change here. And at the time of that stream there was no bullish reversal candle yet, so with the bulls struggling to step in, I said we should basically keep favoring the downside.

And I also walked through the price action that led me to that scenario, including a full recap of how the move played out since the previous session. First, in the video before last, the key focus was whether price could break above the trading range shown in this grey zone. If it failed to break, the bias flipped to the downside, and that was during the Tokyo session.

This here was the Tokyo session, and I'd walked you through the scenario where price comes back to test this low. Without breaking above the top of this trading range, price formed a bearish reversal candle, turned exactly as the scenario called for, stalled right at the Tokyo session low, then rolled over, printing lower highs on the way down. And this week, that very first one-hour candle at the open becomes absolutely crucial.

First off, we opened with a bearish gap, and price is holding onto the body of that bearish candle. So factoring in the open here, this was a setup that could easily turn into a classic downtrend day. And what made a downtrend day likely, and gave us an entry chance, were these two doji candles right here.

About these doji candles: after the drop, the bulls tried to push price back up and stacked longs, but instead of leaving a real body, price printed a long upper wick and got sold right at the highs. So at least the bulls who went long on these dojis are now sitting in unrealized losses. Given how weak that bounce was, I'm basically leaning toward this shaping up as a trend day, and more specifically a downtrend day here.

A big bearish candle formed right after, so there's a strong chance this was a sharp drop that swept out stop losses. Then look at the next bounce, a doji. It rebounded without leaving any bullish body behind, which tells us the bulls are still hesitant and reluctant to commit to the upside here.

Without a clear reversal signal here, the bulls simply don't want to commit to longs, so both bulls and bears end up agreeing on the downside. That's why I'd confidently hold my short position and look to let those profits run further. In a setup like this, personally, I'd want to place my entry just below the low of this doji candle and open a short position right there.

So we were fully in bearish mode here, and let's see how gold actually moved after that. First, as you'd expect, there was a bounce right at the New York session open, but since that rebound never turned into anything strong, we held off on jumping into any long. Price then formed a lower high, and just as our scenario called for, gold sold off, dropping a full 62 dollars, about 627 pips.

So today, just like I mentioned at the start, gold's still trading inside that range built during yesterday's New York session. For the scenario from here and my read on the recent moves, I break it down into three points, community members only. We've got a range forming after that strong drop, and right now it's a time-based correction.

Whether we clearly break the range top decides the short-term direction. Until an upside breakout I stay bearish and watch for a reversal inside the range. So I recapped how to trade inside that range too, walking back through the whole setup one more time. And that wraps up today's gold analysis for you all.