Early in the European session, Gold (XAU/USD) is trading around 1,990.29 above the 21 SMA and below the $2,000 psychological level.
Yesterday, gold started a strong rebound from the 1,964 low (21 SMA) towards the 2,003.21 zone. It has been a strong recovery of more than $39 which would indicate that the bullish trend still prevails.
In case of a further rise, the instrument could break 2,009 and consolidate above the psychological level of $2,000.
In the 4-hour chart, we can see the formation of a double top which could be a sign of a probable change in trend. If this scenario occurs, gold should break the uptrend channel formed since March 8 and trade below 1,960.
According to the 5-minute chart, gold formed a gap around 2,002. This level is likely to be covered before the instrument proceeds with a strong technical correction. In case gold rebounds above 1,986, it could reach the 2,002 zone in the next few days and fill the gap.
On the other hand, if gold falls and consolidates below 1,986 (pivot point), this could be seen as a clear signal to sell with targets at 1,968 (7/8 Murray) and 1,966 (21 SMA).
A technical bounce from 1,986 could give us an opportunity to resume buying with targets around 2,002. A sharp break above the high of 2,009 could mean a bullish acceleration and gold could reach the key level of 2,031 (+1/8 Murray - weekly resistance)
Since March 17, the Eagle indicator has been giving oversold signals. In case there is a technical rebound and gold trades below 2,002, it will be considered an opportunity to sell.
Our trading plan for the next few hours is to sell gold if there is a pullback to 2,002, with targets at 1,986 and 1,968. Additionally, a break below 1,986 will be a signal to sell.