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Early in the American session, gold is trading around 2,388.85, within an uptrend channel, above the 6/8 Murray, and above the 21 SMA.
We believe that gold could continue its rise in the next few hours, but technically it is showing signs of exhaustion. Hence, it is likely that there will be a final rally and the price could reach a high of 2,407.
In our previous articles, we explained that gold has bullish potential since it left a GAP at 2,392 on April 18 that was covered. This strategy always kept us with a positive outlook. Now we believe that gold could enter a technical correction phase, only if it falls below 2,375.
As long as gold trades and consolidates above 6/8 Murray, the outlook remains positive. So, a pullback and bounce above this area will allow us to resume buying with a target at 7/8 Murray located at 2,437.
On the contrary, a drop below 2,365 could mean a break of the uptrend channel and gold could reverse the trajectory downward. Therefore, we could expect it to reach 5/8 Murray located at 2,312 or the 200 EMA located at 2,313. If gold falls towards this area, it could find good support so that the bullish trend could still prevail.
With a daily close below the 200 EMA, the outlook for gold could be negative in the long term. We could expect a fall towards 4/8 Murray located at 2,250. Moreover, the price could even reach the psychological level of $2,200.
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