Today's close decides it: bull squeeze or channel retest? | XAUUSD Nov 6

Hi, I'm Daniel, an active prop trader. Today, gold is bullish on the short-term outlook. Since last time, it moved into a price-based correction exactly as our scenario expected, and we've confirmed a drop of 102 dollars, or 1025 pips, from the recent rally high.

Right now, price is bouncing from a bear channel overshoot. We expect a rally to test the channel's origin, but we should watch for a reversal lower. Will price build an uptrend from here, or reverse and resume the daily chart's downtrend?

That's exactly what I focused on in my analysis today. Alright, let's jump right in, starting with the Tokyo session. In yesterday's Tokyo session, price formed a bullish reversal candle, so it's a bullish reversal candle with a long upper wick.

On the daily chart, I've been telling you in previous videos that an upside breakout of the bear channel could be confirmed using 4070 dollars as the key level. Now, this long upper wick and that 4070 dollar key price zone are sitting right around here, So to call this a full breakout of the channel line, the move beyond it is still too narrow; the breakout margin isn't wide enough yet. So from here, there's now a chance price forms a bearish candle and prints a bearish reversal candlestick too.

So in this situation, we always need to keep trades in both directions in mind, long and short. If a bearish reversal candle forms from here, then on the daily chart, price would theoretically tend to head down and test the lower boundary of this bear channel, and our daily bias would switch over to the downside. However, if today closes as a bullish candle, it tends to trigger the stop loss orders of bears who opened short positions near that recent long upper wick, fueling a squeeze higher.

So in that case, I'd switch my view to bullish and plan for upside from here. If today closes as a bearish candle with a long lower wick, the short-term direction gets harder to read, but on balance, given that this sideways range has formed up in the high price zone, I'd say the overall picture still tends to favor a bullish outlook on gold rather than a bearish one. All right, that's it for the daily chart, so now let's move on to the 1H chart.

On the 1H chart, the red line right here marks the point when I did my last stream exclusively for community members, which was one hour before the London session opened. Here on YouTube, I'll walk you through the key points of the technical analysis and scenarios I covered for our community members at that time. First, as always, I shared my directional bias and the trading scenarios.

At this point in time, the market was forming a strong uptrend, so my directional bias was clearly bullish. I explained to everyone that until we see a clear reversal or a confirmed trend change, I'd actively look for long entries on good, strong bullish price action setups. However, by the fourth candle of the Tokyo session, price had already reached the measured move target we could reasonably expect.

Recently, a spike and channel trend had been unfolding inside a channel like the one drawn here, but at this stage the market was clearly overshooting the upper boundary of that channel. So I also mentioned that in the short term, we should watch out for a price-based correction after that move. And I explained that if price successfully broke out above the upper boundary of the bear channel on the daily chart, the rally could accelerate even further.

The key point was that, realistically, the portion price could rise today had already been covered, so a correction could follow. And rather than a shift into a downtrend, it was just a price-based correction. That was yesterday's main takeaway.

And as always, I've set aside time to look back at the key price action from yesterday's session, so you can see how it really played out. The key point we were watching closely heading into the day was the sideways trading range formed with these two candles as the reference candles, and I started the analysis by explaining how price broke out of that range and what that breakout move actually meant for the chart. First, at the Tokyo session open, price formed a doji, and because the very next candle turned into a failed breakout, candles 1 and 2 became our reference candles.

After that, we clearly saw volatility contract all the way into candle 4, and then price broke out above this doji. The breakout candle itself was candle 5, and honestly, judging the breakout pullback that came after it was really difficult to call in real time, I think. Candle 6 then acted as both the breakout pullback and the upside follow-through at the same time.

With this lower wick, it tested the high of the doji that was the starting point of that final breakout, and from there the follow-through rally just kept going. Heading into the London session, price kept making higher highs with a strong thrust up, forming a bullish swing. So in the end, from candle 5 through to the candle right after candle 6, price formed a bullish spike.

After that, the London session turned into a channel trend. You can draw a clean bull channel here, and the trend kept progressing steadily inside that channel. In response, the New York session opened with a doji, so a trading range could have formed.

But candle 4 broke out to the upside, then candle 5 gave a breakout pullback and formed a small sideways range, and the next day's Tokyo session saw strong momentum continue. When candle 1 broke out to the upside, follow-through carried on all the way to candle 4. Once it hit the measured move target, about an hour before the London session opened, price broke down through the most recent candle 5, a bearish doji, and briefly formed a strong bullish reversal candle.

The key focus then was whether that follow-through would continue from there. So, with all of that laid out in the analysis, how did price actually end up moving? Just as expected, gold shifted into a price-based correction, exactly in line with our scenario.

As you can see on the chart, a clean downtrend has formed inside a descending channel. Measured from the most recent rally high, that's a drop of 102 dollars, or roughly 1025 pips, playing out just as the scenario predicted. For today's Trading Lab members-only session, I broke down the upcoming scenario around these three key points.

After the strong rebound following the drop, the short-term bias is bullish. If the rally continues, we expect price to test the origin of the recent decline. But if a reversal is confirmed, we quickly switch to a bearish bias, and that bearish view reflects the daily chart.

Now let's take another look at the real-time chart. After the strong bullish marubozu formed on bar 2, the most recent bar, bar 3, printed a bearish reversal bar, and price is now attempting to form a follow-through bar. There are about 39 minutes left until the next 1H candle closes, and how that candle closes will be a key turning point that sets the direction from here. That wraps up today's gold analysis.