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Last week, the price of gold rebounded strongly after a five-week losing streak. This recovery of over $50 in price is a positive sign. It is likely that gold will appreciate in the coming days and could reach the key level of 1,750 (4/8 Murray)
The overall trend is still down. Indeed, the price could resume the down move if it fails to consolidate above 1,736 and could fall to the psychological level of 1,700.
According to the 4-hour chart, we can see that gold has been testing the strength of the downtrend channel since last week. After two unsuccessful attempts to break out of this channel, the gold price reversed and fell towards the 21 SMA located at 1,714.
Currently, we can see that XAU/USD is bouncing above the 21 SMA and is now trading above 3/8 Murray located at 1,718. If the strength of the technical bounce continues in the next few hours, the price could break the top of the downtrend channel and we could expect an acceleration towards the area of 1,750.
In case gold fails to break the downtrend channel, we could expect a technical correction again and the metal could lose its value and fall towards the support zone of 1,714 (21 SMA). It could even return to levels of 2/8 Murray at 1,687.
On July 22, the eagle indicator reached the 95-point zone, which represents an imminent technical correction. Therefore, if gold fails to break the uptrend channel, we could expect a strong technical correction and it could fall towards the zone of 1,687 and could even reach the minimum of July 21 at 1,680.
Our trading plan for the next few hours is to buy gold above the 21 SMA located at 1,714, with targets at 1,730 and 1,750 (4/8 Murray). With a return below 1,710, we should avoid buying gold because the odds are for a strong technical correction towards 1,687.
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