Gold at 4,179 doji — break below 4,133 or reverse to 4,217? | XAUUSD Oct 12

Hi, Daniel here, an active prop trader. Today my short-term bias on gold is bearish. Since last time, it formed a pullback after a correction in the London session, then resumed rising exactly as in our scenario, climbing a full 488 pips up to the most recent high.

Now we're in the middle of a downswing, but a doji candlestick has formed near last Friday's low, so rather than chasing the decline, this is a phase where I'd look for a long after a reversal. Will price break straight below the low and keep falling lower, or will it reverse from this current key level and turn back up into a new rally? That's the focus of today's analysis, and I've walked through it in detail.

So let's get right into a detailed look at the daily chart. As of the end of last week, the daily chart closed with a bullish candle, just as we expected. For the daily scenario, here's what I told you.

The most recent candle had closed as a bullish doji, which we could read as price testing the lower edge of the daily range, the one marked by the gray zone on the chart. Because of that, I explained that a move up to test the upper edge of the range was basically the more likely development from here. As for the basic strategy, I said the same thing applies back then: entries on the daily level should wait for a clean breakout of the range and then a confirmed pullback before getting in.

And even if you wanted to trade the range itself, you would already have needed to be in a long position at the moment price broke the most recent daily high. So, for those reasons, I explained that right now is not a situation where we should be considering any new daily-level entries. In the end, the daily chart closed as a bullish candle, and just as in our scenario, price has been moving to test the upper edge of the range.

Right now, though, the daily candle has reversed and is trying to form a bearish candle. So if it closes bearish like this, I think there's a high chance that the upper edge of the range, which is currently right here, will start shifting lower. On the other hand, if price flips back into a bullish candle from here, keep in mind that bears should have been setting up shorts during today's Tokyo and London sessions.

Their stop losses would likely get hit, so we could easily see a breakout of the range from here. That's why how today's daily candle closes is extremely important. Next, let's drop down to a lower timeframe and look at the 1H chart.

This red vertical line on the 1H chart you're seeing now marks the exact point where I did my last live stream exclusively for Trading Lab members at the end of last week. Here on YouTube, I'll walk you through the key points of the scenario and technical analysis I shared back then, focusing only on what matters most. First, let's look back at the price action right before the stream.

At that point, the previous day's high was around this level. After a big bullish candle broke out to the upside, this move here became the bullish spike, and then a channel trend developed. It was a very strong upswing, and looking at the internal price action, the time-based correction just hadn't been able to keep up.

The highs of the doji candles were working perfectly as good entry points for bullish traders. However, I was skeptical about this uptrend continuing much further from here. The reason is that we had a classic setup where a channel trend formed right after the bullish spike.

In that kind of structure, an overshoot of the channel can basically be read as a warning sign that the market is about to enter a correction phase rather than further upside. Given that situation, I explained that from here I was on alert for either a price correction, meaning a pullback that could go as deep as testing the previous day's high at most, or a time correction, where price simply moves sideways for a while. That was the scenario I laid out, and looking back now, I also covered some really important moves along the way.

So first, let's look at this range right here. Price formed a bearish reversal candle, then a doji. The breakout to the downside got follow-through, but it didn't last, and another doji marked the bottom of the range, forming an inverted triangle.

When an inverted triangle breaks out, the swing tends to run a long way, and that's exactly what happened. At the bottom of the range, price printed a bullish reversal candle, and then at the top of the range it formed a doji. That doji is an ideal setup candle: go long above its high, or go short below its low.

What made it an especially strong signal is that the candle itself was small compared with the bars inside the previous swing. After that, price broke out above the doji, and a big bullish candle swept up the bears' stop loss orders as it pushed on toward an even higher high. It then paused there, testing that upside breakout level.

And as I mentioned earlier, this move formed a single bullish spike, and what came after was a channel trend. Price was also overshooting that channel line at that point, so in my analysis I explained that the market was likely to enter a correction from there. In theory, price often comes back to test the origin of the channel, so I was watching this area.

And considering the recent price action, we also needed to be cautious about a pullback to the breakout point, in other words, back to the previous day's high. So how did the market move in the end? Exactly as in the scenario.

After the stream, price entered a correction and tested the origin of the channel. Then it returned to the uptrend and rallied up to the high set at today's Tokyo session open, a 48-dollar move, which in pip terms comes to roughly 488 pips of upside, and we've clearly confirmed that move played out on the chart. Today, exclusively for our Trading Lab community, I use these three key points to break down the upcoming scenarios, both bullish and bearish.

The downswing is still in progress, so for now our short-term bias stays bearish. On the other hand, price has already dropped near late last week's low, so we need to watch out for a reversal. I explained that if the decline continues, we'd consider short-term selling, but once the New York session opens, we'd reset our bias to neutral for now and reassess the market from scratch.

Just recently, after a doji candlestick formed, we've seen an attempt at a reversal. Now the key is which direction price breaks out of this doji, and the 1H candle closes in about 17 minutes. I want to watch that breakout closely. That's all for today's gold analysis.