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Early in the European session, Gold (XAU/USD) is trading around 1,773 above the uptrend channel and below the 21 SMA located at 1,784. We see a consolidation in the last few hours as investors are waiting for news for precedent from the US, which makes them more cautious.
Having reached the area of 1,810, gold started a strong technical reversal and is now consolidating around 1,766-1,780. A sharp break of 1,765 could accelerate the decline towards 1,730.
On the 4-hour chart, we can see the formation of the inverted pennant pattern, whose break below 1,765 will generate a bearish movement and the price could reach 1,734 and could even fall towards the psychological level of 1,700.
In case gold trades within this pattern (inverted pennant), we could expect a pullback towards 1,784 which represents a strong resistance zone. On the other hand, in case there is a sharp break below this technical pattern, a fall in gold could be confirmed and this would be exposed to the support of 8/8 Murray at 1,750, and the price could even reach the 200 EMA located at 1,734.
Above 1,785, gold could resume its bullish cycle and could even reach +2/8 Murray located at 1,812.
The markets' attention is still focused on the FOMC meeting scheduled for December 13 and 14. Before the policy update, gold is expected to continue with its technical correction because investors could take profits and then resume their bullish cycle.
Our trading plan for the next few hours is to sell gold below 1,765 or wait for a pullback to 1,784 to sell, with targets at 1,750 and 1,765. The eagle indicator is giving a negative signal, which supports our bearish strategy.
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