Gold at 3,962 or 3,982 first? Today's two scenarios | XAUUSD Nov 12

Hi, it's Daniel, your energetic prop trader. Today my bias on gold is bearish. Since last time, things went exactly as planned: at the London session open, price first tested the Tokyo session high, the breakout failed, and gold reversed sharply lower, dropping about 98 dollars, roughly 983 pips.

Right now the downtrend is intact. During the Tokyo session, gold has been forming a trading range, but for now I see it as a time-based correction within the downtrend. So the key question I focused on today is this: will gold break out to the downside of this trading range and resume the downtrend, or will it break out to the upside, reverse, and start a new rally?

That's what I've broken down for you. Alright, so let's dive right in and take a detailed look, starting with the daily chart. On gold, yesterday's daily candle closed as a bearish candle.

That candle clearly broke out to the downside of the sideways range we'd originally been tracking, the one built on candles 45 and 46 as our two reference candles. Therefore, for the bearish scenario where price broke out to the downside, yesterday I said a move testing candle 42 was the most likely outcome, and as of now, today's daily candle is already playing out exactly as that scenario described. From here, if price shows a rebound or we confirm that the bearish momentum is fading, we'll need to reset our bias back to neutral.

But right now, the downside follow-through from candle 48 is still continuing, so on the daily timeframe I want to avoid trading against the trend. If today's daily candle closes bearish but with only a small real body, that would confirm the loss of momentum I mentioned a moment ago. So from tomorrow onward, especially around the Tokyo session open, I'll be watching closely for a possible rebound.

On the other hand, if today's daily candle closes as a bullish candle that fully cancels out yesterday's daily candle, price would simply drift back into the same trading range. In that case, the final call on a breakout, and on how strong it might be, gets pushed further out, so that's the one scenario I want to stay careful about. Next, let's move on to the 1H chart.

This is where the 1H chart stood yesterday, at the moment I did my live stream for our Trading Lab community members. Here on YouTube, I'll walk you through the key points of the technical analysis scenario I explained at that time, just as it was presented. So, the first key point.

At that time, price was sitting right here, at the lower boundary of the daily range. Remember, this was the situation at that point in time. From that daily range low, the market found a bottom and turned around.

Then, after the New York session close, it started forming what we call an ascending trading range. Because of that structure, my short-term bias was to the upside, looking for higher prices. As long as this trading range held, I was looking at long positions.

But with this kind of pattern, you naturally have to be prepared for a sharp drop that tests the lower edge of the range first. The timing I wanted to watch most carefully was the open of the London session and the New York session. And if we confirmed a failed breakout to the upside, that'd be a key signal to consider shorts.

That was the scenario I shared with you yesterday. I also picked out several candlesticks and explained the price action that led up to that decision. Yesterday, I walked you through the price action from this point onward.

This doji formed toward the close of the Tokyo session, then a bullish candle broke out above it. But the follow-through on that bullish breakout candle was rejected by the next candle, a bearish doji. Then the London open came in with a large bearish candle, breaking out below this doji.

The very next candle was a bullish pin bar with a long upper wick, forming a breakout pullback. After that, candle 3, a large bearish candle, formed as strong follow-through. This downswing then continued all the way into the low of candle 5.

Now, if you look at candle 6, the one right after candle 5, it looks like a bullish reversal bar. Just before it, a bearish candle with a long lower wick formed, and then a bullish candle followed, so you could read it as a bullish reversal bar. But the downswing up to this point had extremely strong momentum.

In cases like this one, inside our Trading Lab community, we always explain that no matter how good this looks as a reversal bar, it's still a pretty weak reversal signal. In a market environment with momentum this strong, a valid bullish reversal signal needs supporting price action, like at least two tests of the same price level, or a clear higher swing low. But at this point, that kind of price action simply hadn't been confirmed yet on the chart here.

In our case, we explained that even when a bullish reversal bar like this shows up, depending on the situation, we should actually treat it as a good entry point for following the trend instead. As for the actual entry points, there was the area just below the low of bar 1, and also below the low of bar 2, meaning below the low of the pullback bar. We pointed out that these spots had turned out to be good entry points, and we went all the way through explaining the specific short entry points.

Then bar 6. We said that while this is a bullish reversal bar, it wouldn't be a good signal. And if we follow what happened next, the area just below the lows of bars 5 and 6 also turned out to be a good entry point once again.

Then from the New York session open, a big bearish candle formed right at the open, sweeping up the stop loss orders of the bulls who had bought here, and we saw strong follow-through. As for the bullish candles along the way, it's the same idea as before: they basically shook out the counter-trend traders betting on a bounce, and that led to the downswing continuing. After that, price bounced off the lower edge of the daily trading range, and a weak uptrend continued right up to the time of this stream, forming a rising trading range along the way.

Of course, the price action inside that range is a trend in its own right too, so it's something we can look to trade. But what makes it different from a normal uptrend is that we always have to keep a trade in the opposite direction in mind as well. So what specific moves were we watching for?

It was the scenario I laid out at the start: a failed breakout at a key level, and I stressed being especially careful when that failure happens right at the open of each session, London or New York. So, how did gold actually end up moving? After the stream went out, gold did exactly what we expected: at the London open it pushed up to test the Tokyo session high, and then that upside breakout failed, a textbook false break, right in line with our scenario.

From there it sold off very cleanly, dropping about 98 dollars, roughly 983 pips, all the way down to the low set at today's Tokyo session open. Today's scenario and the technical analysis so far are covered in full detail in our Trading Lab community. Today I walked you through three main points.

First, the Tokyo session is still stuck in a range, so the current bias is bearish. Second, if the range holds, watch for the decline to resume in the New York session. Third, if price clearly breaks above the range high, consider switching to a bullish bias.

Using today's Tokyo session range as the anchor, which price action should we watch to decide on a bias switch? That's how I'd approach today's market, and that's the breakdown I wanted to share with you. Looking at the live chart right now, price still hasn't managed to break below the Tokyo session low.

It's technically moving lower, but the downward momentum feels half-hearted. The London session open is coming up shortly, so I'll be watching how price reacts at the open. That wraps up today's gold analysis.