Gold hits 4,200 target — uptrend holds or channel breaks? | XAUUSD Sep 30

Hi everyone, Daniel here, active prop trader. Gold is looking bullish short-term. Since last time, that doji I was watching broke to the upside, flipping the bias bullish, and after a clean breakout pullback price rallied 453 pips from there.

Right now on the 1H chart, gold is still holding its uptrend. In my earlier community-only stream, I called for a push above the recent high, targeting a move up to just past the 4200 dollar level. Right now price has hit that target and it's testing a reversal from there.

The big question is whether gold keeps this uptrend going, or whether it breaks sharply below the channel line that's been supporting this recent move. If that channel breaks down, my bias flips to the downside, so that's exactly what I've been watching closely here. Alright, let's dive straight into the daily chart.

On gold, the daily timeframe closed the previous day as a bullish candle, so we're building from that. First off, as of yesterday I told you on the daily chart that if this turns into a breakout pullback, these lows are the levels traders will be watching closely, and if price is going to test them, it's much better that it tests them early rather than later. On this breakout pullback, I explained that if the move down toward these lows comes late, price will only be testing them after the trend has already flipped, and at that point their edge as a rally-selling high really starts to fade away.

On the other hand, the candle right before this printed as a clean, big bearish candle, so momentum was very strong. And I mentioned that because of that strength, if we do see a correction after this, it's far more likely to play out as a correction through time rather than through price. In the end, the daily candle I flagged at the start closed yesterday as a bullish candle, so we can say this didn't turn into the kind of move that would come back and test that lower zone.

With momentum this strong, and if we go back further, we were clearly in an ongoing downtrend, so fundamentally yesterday's bullish candle should be read as nothing more than a bounce, a rebound against that established downtrend. That said, I think there are really two things worth pointing out here. For this to act as a bullish reversal candle, we need a bullish body roughly the same size as yesterday's or bigger, breaking out above the prior high to the upside.

And when bulls jump in on just this single bullish candle, their stop loss orders tend to cluster right around these lows. So if price breaks out to the downside, it'll sweep through all those stops, and that's exactly why momentum can accelerate hard and push the market down sharply from here. So how today's daily candle closes is going to be really important for reconfirming the daily chart's overall direction from here.

Let's move to the 1H timeframe now. At the time of yesterday's community-only stream, price was sitting right here at this red line, on this bullish doji candle. So let me walk you back through what I was actually explaining here on YouTube at that time, including the full scenario I had laid out for you.

First off, at the time of that broadcast, price was sitting right inside the trading range that had formed during the previous day's New York session, so we were trapped within those boundaries. And that bullish doji formed right at the top of the range, so by the textbook the range was likely to keep holding, which meant we wanted to consider shorting near that upper boundary rather than chasing any breakout higher. So on the short-term picture I was leaning bearish, expecting downside from here.

That said, if price breaks out above this key level to the upside, then my short-term view flips bullish and I'd start looking higher instead. So my base case is that this sideways time-based consolidation gradually shifts into a price-based correction, meaning we should finally see a real move in the range itself. The bigger-picture downtrend itself simply isn't breaking down here.

Basically, breaking above this level flips us short-term bullish, but the bigger-picture downtrend still holds firm. As a general theory, whenever a strong trend fires off, the very next day very often forms a trading range instead of extending. So we treat range trading as the base case first, then if the range breaks out back in the original direction, I mentioned we'd want to target the resumption of the downtrend.

So along with this scenario, I've also picked out a few key candles in the price action that shaped how I reached this whole judgment, and I'll walk you through them. Let me first go back to where I left off in the last stream, the part I hadn't yet covered. Right here we first get a clear bullish reversal candle.

Since Monday's open, price has been in a downswing, and this is the very first candle to leave a proper bullish body — a real bullish reversal signal. So at minimum we shift into a time correction here, or a price correction if it's strong. Even after breaking above that bullish reversal candle, we closed with a bearish doji here.

So this really tells us the bulls are still weak here. And the decisive clue is this candle that clearly tried to push the highs up but ultimately closed as a doji. Then, right at the New York session open, the very next candle confirmed a bullish pin bar with a long lower wick, which really shifted the tone here.

At this point we were clearly building a range, so it was fair to say the New York session was likely to keep developing into a proper trading-range structure from here. And then, right after this big bearish candle broke lower, that candle turned into a climax bar, which then led price into forming a small, tight sideways range here. The reference candle here is this doji, and after it broke to the downside, that breakout ended up failing completely.

The lower boundary has been stretched even further, pushed down to around the 4,113 dollar area here. In this setup, we were testing the range's upper edge, so at broadcast I leaned bearish, but if it breaks above, I'd flip to a short-term bullish bias, but the bigger picture is still a downtrend that stays intact. So let's take a look at how gold actually ended up moving in the end after all of this.

After the broadcast, price broke above this doji, flipping us bullish. Then a bullish reversal candle formed, and we got a clean breakout pullback back against the broken range here. From this low up to the recent high made during the Tokyo session, price rallied about 45 dollars, roughly 453 pips, playing out exactly as our scenario called for.

That's the current situation we've got. So for today's setup, I'm breaking it down into three key points for our community members. First, the 1H is still uptrending, so short-term I'm bullish.

Second, I'm still targeting more upside, but the trend structure does carry reversal risk. Third, if price clearly breaks the trendline, that's when I flip my bias to the downside and start looking for shorts. Right now, the main scenario is playing out exactly as planned, with price pushing up to just past the 4200 level.

Whether it reverses from here, we need clear criteria to read this market. Stay alert for a sharp drop too. That wraps up today's gold update.