Gold's range breakout: the one level to check before going long | XAUUSD Oct 13

Hi everyone, I'm Daniel, an active prop trader. Today my bias on gold is bullish. In the previous analysis I was cautious about a possible reversal, but price broke out below the doji candle, and after that we saw gold drop a full 255 pips.

Right now, after building a strong uptrend during the Tokyo session, price has moved into a sideways range since the London session open, forming doji candles. So basically, with this range, since there was a strong trend right before it, my main scenario is an upside breakout from here. So will price break higher from here and test the previous day's high at 4217 dollars, or break out to the downside and form a deeper pullback?

That's what I focused on throughout today's breakdown of the chart. Let's jump right in and start with the daily chart. Looking at the gold daily chart, yesterday's candle closed as a bearish doji, a small-bodied indecision candle.

For the daily scenario, in the previous video I explained that the candle before that had closed as a big bullish candle, and that, just as our scenario expected, price had moved up to test the top of the trading range, which I've marked here with this gray zone, so that move had actually materialized. At the time of that video, the daily candle wasn't confirmed yet, but it had reversed and was trying to form a bearish candle. So I said that if it closed as a bearish candle, the top of the trading range would likely start stepping down from there.

On the other hand, if it didn't close bearish and flipped back into a bullish candle, then naturally, since the bears had been aggressively setting up short positions throughout the Tokyo and London sessions that day, price would likely push higher by triggering their stop loss orders and squeezing them out. And I explained that this doji could easily become the starting point for an upside breakout from the trading range. In the end, as I mentioned at the very beginning, the daily candle formed a doji but it closed bearish.

So looking at the daily candle on its own, the chances that the upper limit of the daily trading range gets pushed lower have now increased. On the other hand, right now, even though price briefly broke out below the low of yesterday's daily candle, that move didn't gain any momentum to the downside. Instead, it left a long lower wick and recovered strongly.

So first of all, we can say a sideways trading range based on yesterday's daily candle is likely to form. On top of that, price is now cleanly testing the upper limit inside that range, so we can't simply say it will smoothly come back down and test the lower limit of the range in the same clean way. It's not that clear-cut.

In any case, when it comes to a range breakout on the daily chart, we only need to think about it once we've actually confirmed that breakout on the daily chart. So for today, on day-trading timeframes and below, yesterday's daily candle is a doji, so its high and low are likely to work as key levels, and price will basically tend to form a range. I think it's enough to keep that in mind.

Next, let's move on and take a look at the 1H chart for gold. On the 1H chart, when I did my last stream exclusively for Trading Lab members, price had just formed this bearish doji candle marked with the red line, which I covered. Here on YouTube, I'll focus on the key points of the scenario and technical analysis I shared with our community members at that time, so let's keep going.

First, let's talk about the market bias. In terms of bias, the Tokyo session showed clear downtrend day price action, and on top of that the candle closed as a doji. Since we're basically still inside a larger downswing, I explained that our bias was to the downside.

However, this doji, which formed as a textbook, perfect doji, was the very first one to print during this entire downswing. It was testing last weekend's low right here, around the 4168 dollar level, and at the same time you could say price was tapping into this FVG, this fair value gap. Because of that combination, I explained that we wanted to stay strongly on alert for a possible major reversal from here.

So given that situation, I was thinking that if a long setup formed, it was entirely possible we'd switch our bias to the upside. On the other hand, if price kept running lower, it would naturally break out decisively below this doji candle. In that case, we'd consider shorts on the lower timeframes, and then, at the New York session open, reset our bias to neutral and reassess it from scratch.

That's what I told everyone. Within this kind of market flow, we also walk through the process of how price moved to get to that point, step by step, inside our Trading Lab community. First, take a look at this candle here, the London session open on Friday.

We have two consecutive doji candles of the same size. What this tells us, first of all, is that a small sideways range is forming on the chart right now. After that, a bearish candle broke out to the downside.

With this doji effectively acting as the real breakout pullback, a clear downswing then formed, running from this doji's stall right into the New York session open. At the New York session open, a bearish doji formed, but then a bullish candle printed and price broke out to the upside. That breakout then failed, and that's exactly where last Friday's session closed, so that was the situation heading into the weekend.

Moving into the new week, the Tokyo session opened with a small bearish gap, technically a slight gap down, and that opening candle itself was a doji, signaling indecision at the open. With traders watching which way that doji would break, the market eventually broke out to the upside, testing the doji that formed at the New York session open at the end of last week. After that, a doji formed at the high, then this bearish candle broke out to the downside, the downswing continued, and that led to the bearish doji forming at the time of this broadcast.

With this doji, there was a high chance of a bounce, but at the same time, if price broke below it, it could easily make a new low. That was the setup we were watching. In the end, gold broke out to the downside of this doji, so the price ended up dropping about 25 dollars, roughly 255 pips, from this high all the way down to this low.

Also, as for our bias, just like in our scenario, we needed to go flat and stay neutral for now at the New York open. The New York session clearly switched from the obvious downtrend day we'd seen so far into a trading range day. Then, heading into today's Tokyo session open, price reversed, formed an upswing, and most recently printed a bearish doji candle.

That's how things have played out. In today's stream for Trading Lab members only, I walked through these three points, covering the upcoming scenario and the technical analysis so far. First, after the strong rally in the Tokyo session, price shifted into a range at the London open.

Second, the upward momentum is strong, so we're keeping a bullish bias for now. Third, which way price breaks out of the recent range will decide the next direction. That's what I explained.

Still, we can see the magnet effect at work, with price stuck in a sideways range since the doji candle one hour before the London open. First, I'll watch closely which way this range breaks out. That's all for today's gold market analysis broadcast.