Early in the European session, Gold (XAU/USD) is trading around 1,793.44, above the 21 SMA, and above +1/8 Murray showing some bullish strength. It is likely to extend its rise until it reaches the psychological level of 1,800. XAU/USD maintains gains after hitting a high of 1,795.
According to the 4-hour chart, we can see that gold is trading around the 61.8% Fibonacci, tracing from the high of 1,810 to the low of 1,765.
In the next few hours, in case gold fails to consolidate above 1,795, a technical correction is expected and the instrument could reach the zone of 38.2% Fibonacci around 1,783. If the technical correction continues, the price could bounce around 1,778, the level that coincides with the 21 SMA.
XAU/USD could continue to rise but needs to find a support zone. If gold fails to break above 1,795, it is likely to fall below 1,790 and could accelerate the bearish move towards the zone at 1,778 (21 SMA).
This area is the key to a recovery of gold, which also coincides with the bottom of the uptrend channel formed since November 22 which could provide bullish momentum.
The next important resistance is located near the area of 1,803 -1,812 (+2/8 Murray). In case gold exceeds this level and it consolidates above 1,815 on the daily chart, it could appreciate even more towards the barrier of 1,845.
On the other hand, the area of 1,778 -1,775 could trigger a fall in gold and the price could reach support levels of 1,765 and up to 8/8 Murray at 1,750. In case this scenario comes true, it could mean a trend reversal for gold. In addition, a sharp break of the uptrend channel would also be an opportunity to sell in the short term with targets at the psychological level of 1,700.
Our trading plan for the next few hours is to sell below 1,795 with targets at 1,785 and 1,778 (21 SMA). In case XAU/USD rebounds above the SMA of 21, it will be a clear signal to buy with targets at 1,800 and 1,812. The eagle indicator is giving a positive signal. It means that any technical correction will be considered an opportunity to buy only if it trades above 1,775.