Early in the American session, gold (XAU/USD) is trading at around 1,682.90 with a strong downward bias. The price is seen to be breaking the critical 2/8 Murray support located at 1,687. If gold manages to settle below 1,687, it is likely to continue to decline in the next few hours and could drop to 1 /8 Murray located at 1,656.
Downside pressure could intensify in case gold trades below 1,687.
According to the 4-hour chart, we can see that gold maintains a bearish bias and could make a technical bounce around the 1,660 - 1,656 zone.
If gold falls to the area of 1,660 in the next few hours, it will be an opportunity to buy on the technical bounce with targets at 1,687 and 1,723 (21 SMA).
On the other hand, in case gold recovers from the bearish pressure, we should expect a daily close above 2/8 Murray and above the psychological level of 1,700. Then, it will be a good opportunity to buy.
According to the daily chart, we can see a downtrend channel formed since July 20, which is a sign that gold could continue trading within a range of 1,650 (1/8 Murray) – 1,723 (21 SMA – top bearish channel).
A sharp break and a close above 3/8 Murray on the daily chart and above the 21 SMA located at 1,723 will be a clear signal to buy with targets at the 200 EMA located at 1,804.
Since July 8, the eagle indicator is giving a positive divergence. In case there is a technical rebound in the 1,660 zone, it will be an opportunity to buy.
Our trading plan for the next few hours is to buy above 1,690 or to wait for a technical bounce of around 1,660 to buy with targets at 1,723. The eagle indicator is giving a positive signal, but we should wait for a bounce of the support of 1/8 Murray to buy.