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Early in the European session Gold, (XAU/USD) is trading around 2,050.88, below the 21 SMA, and within a downtrend channel forming since January 11. Gold is showing signs of exhaustion, so a technical correction is expected in the next few hours. If gold falls below 2,053, it could begin a technical correction and could reach 2,042 and even the bottom of the downtrend channel around 2,031.
On a fundamental level, the likelihood of the US Federal Reserve cutting its interest rate in 2024 is acting as good support for the bulls. This enables gold to continue consolidating above the psychological level of $2,000.
Technically, after having reached the high at 2,062, gold made a strong technical correction and is now under downward pressure. Therefore, if gold trades below 2,054 in the next few hours, this will be seen as an opportunity to sell.
On the contrary, if gold consolidates above 2,055 and breaks the downtrend channel formed on the H1 chart, we could expect a new bullish movement and the price could reach 2,062. Given that the eagle indicator is already giving overbought signals and while trading below 2,062, any technical rebound will be seen as an opportunity to sell.
The market sentiment report shows that there are 56.87% of traders who are buying gold. This statistic could play a role against gold and we could expect a technical correction in the coming days.
Our trading plan for the next few hours is to sell gold below 2,062 with targets at 2,040 and 2,031. If bearish pressure prevails, we could continue selling with the target at 2,015, the low of November 11. The Eagle Indicator is in an extremely overbought zone so that we expect an imminent technical correction to occur.
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