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Early in the European session, gold (XAU/USD) is trading around 2,053.95, below the 5/8 Murray line, above the 21 SMA, and within a secondary uptrend channel formed since December 13.
According to the H4 chart, gold is showing signs of exhaustion as it is trading below the top of the uptrend channel around 2,076 or below 5/8 Murray. Traders see this as an opportunity to sell with targets at 2,044 and 2,010.
Additionally, with a sharp break of the secondary uptrend channel and a break below 2,044 (21 SMA), we could expect the price to drop and reach the 200 EMA located at 2,010. The instrument could even reach the psychological level of $2,000 and the bottom of the uptrend channel formed since early December.
The market sentiment report shows that 59.96% of traders are buying gold. According to our contrarian strategy, we expect that gold could keep on with its pullback in the coming days and could reach 2,030 and the psychological level of $2,000.
In case there is a daily close above 2,062 and a consolidation above 2,075, we would expect gold to continue rising and the price could reach 6/8 Murray at 2,125.
The eagle indicator is giving a positive signal but is showing signs of exhaustion. So, any pullback towards 2,062 or 2,075 will be seen as a signal to sell with the target at 2,010 (200 EMA).
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