Range or downtrend resumption — the level that decides it | XAUUSD Nov 3

Hi, I'm Daniel, your energetic prop trader. Today on gold, my short-term bias is bearish, but for the day as a whole, it's likely to end in a trading range. Since last time, the London session stayed in a trading range, just as in our scenario.

At the New York open, price tried to break out to the upside, but failed to form a breakout and pullback, and right now it has erased most of that rally. On the daily chart, price is still in a time-based correction after a strong drop, so short term I'm favoring the downside. I focused this breakdown on whether this trading range continues or the downtrend resumes.

Alright, let's jump right in, starting with the Tokyo session. For gold in the Tokyo session, the previous day's candle 49 closed as a bullish candle. Looking at the overall flow, since this came right after candle 48, a big bearish candle with strong momentum, I'd mentioned it was likely to turn into a time-based correction.

Now that price is trading inside candle 48, it's fair to say we've shifted into that time-based correction. As for how things play out for the rest of today, my main scenario is still price forming an inside bar within candle 49. If it does test the highs, keep in mind that breakouts from a sideways range usually end in failure, so I'd expect a wick to form and the body to get pulled back in by the close.

Then, once price breaks below the low, if the downside follow-through momentum is strong, the downtrend is likely to resume from here. There's also a bullish scenario worth considering, even though it's the least likely to play out. After a long lower wick forms and we confirm real buying support underneath, price could break out above the high of candle 49, then close as a near-marubozu, leaving a fairly solid bullish body.

Why do we need to keep this scenario in mind? Because if it plays out, the big bearish candle at candle 48 would shift into being read as a so-called selling climax candle, the final flush of selling. From there, we'd also have to seriously consider a reversal into an uptrend on the daily chart.

That wraps up the daily chart, so let's move on to the 1H chart and take a look. On the 1H chart, this red vertical line you see right now marks the exact point on the 1H chart where we did yesterday's stream exclusively for our Trading Lab community. So here on YouTube, I'll walk you through the key points of the technical analysis and scenarios we covered inside our Trading Lab community at this exact moment.

First, looking at the 1H chart, yesterday price failed to fully break out of the Tokyo session's trading range, and momentum was clearly lacking as well. So I first explained that, as our baseline environment, the short-term market had completely lost any sense of direction, before getting into the scenarios.

I also explained that after rebounding from a strong downtrend, price never made a second test of the low, so conditions favored an indecisive sideways trading range forming, On the daily chart, I said we'd keep prioritizing the downtrend continuing, but if this trading range breaks to the upside, it tends to turn into a so-called bullish trading range, and especially when the range is narrow, I only want to target shorts after the final sharp drop.

On the other hand, if price kept going and broke out to the downside below the low set during the Tokyo session, the pullback could be shallow, so I explained that we'd need to be ready to follow the breakout with a somewhat wider stop loss. And I've also walked through each of the price moves since that last analysis, step by step. So where exactly did that breakdown start?

It starts right from the doji candlestick that formed at the London session open, which means I've also covered all of the price action that unfolded after my previous live stream in detail, candle by candle. At the London open, a bearish doji formed and price tried to break out to the upside, but that breakout failed, the candle turned into a bearish reversal bar, and price then dropped. When a strong trend is underway, a countertrend setup, no matter how strong it looks, basically, it usually ends up becoming a short signal bar, and it's often treated as a good entry point for shorts.

In this case too, a big bull bar broke out to the upside above the doji, and it looks quite strong, but bar 3 is a bear bar, so the breakout failed. If this turns into a breakout pullback, then a long entry above the high of bar 3 should get filled, so you could place a buy stop order there in advance, and on the downside, you could also have set a sell stop order to go short below the low of that bar. Whichever direction it breaks, if testing a higher high or a lower low is the path toward the scenario playing out, then placing stop orders on both sides in advance is probably the simplest and clearest way to trade this kind of setup.

After that, a series of bearish candles kept forming right up until bar 8, where the bullish candle turned into a doji. So effectively, the move from bar 3 down through bar 2, carrying into bar 3 of that session, was one single downward spike, and then from bar 4 through bar 8 the price settled into a fairly orderly descending channel. That was the situation on the chart.

This is what's known as a classic spike and channel trend. Following what happened next, price usually comes back to test the starting point of the channel, but on bar 6 of the following day's Tokyo session, it firmly tested the upper boundary of the channel instead. After that, the bars overlapped, and in reality a sideways range kept going from the bullish doji formed in the second hour of the Tokyo session open.

After a strong downtrend formed, the rebound was weak, and even if price kept falling, the Tokyo session had only just opened, and it was also the very first trading day of the new week. So I explained that a half-hearted, indecisive rebound like this tends to easily lead into a sideways range, and I clearly presented the formation of a trading range in the hours that followed as our main scenario. As for breakouts, I explained that rather than chasing them, we should expect a trading range to form after the rise and look to target the move back down.

And after the stream, gold did exactly that, staying in a trading range just as our scenario laid out. We did get an upside breakout, but no breakout pullback followed. Sharp moves like that tend to get mostly retraced, and that's exactly what happened here, right by the book.

The previous day's New York session high and the high set at the Tokyo session open formed a double top with a lower high, and the drop that followed completely wiped out the whole rally. In today's analysis for Trading Lab members, I broke down the scenario around three key points. First, based on the daily chart, we're currently in a phase where a trading range is likely to form.

Second, the recent drop looks to be pausing, so I'm watching for a short-term rebound. Third, even if price rises, it's likely to stay inside the range, and I also flagged caution for an eventual move lower. Going back to the real-time chart once more, as I mentioned at the start, my view is that the overall flow is basically likely to form a trading range.

Volatility is high, but price hasn't broken either the major highs or the major lows, so for now I'm also staying cautious about a rebound from here. That wraps up today's gold market analysis from me.