In the European session, gold slipped to a low of 1,949.61 and from that level made a strong technical rebound. Now it is trading at about 1,977. Gold is expected to continue its rise in the next few hours and it could face the resistance zone of 1,985 towards 1,990.
The top of the downtrend channel, which has been underway since March 17, is located around this zone. It could serve as strong resistance and from then, we could expect a technical correction.
When gold reached the 1,950 level, this level coincided with the uptrend channel, which favored its recovery. Now the instrument is trading above the 21 SMA and 200 EMA. On conditions of any technical correction towards this area and as long as gold is trading above 1,959, this could be seen as a buying opportunity.
On the other hand, a pullback towards the 1,989 area could be a clear signal to sell with targets at 1,975 and 1,968. Eventually, the metal could reach the 200 EMA located at 1,960.
In case gold consolidates above 1,990, we should be careful because the price is likely to approach the psychological level of $2,000. This could mean a new bullish sequence so that gold is likely to continue its climb until it reached +1/8 Murray at 2,031.
Our trading plan for the next hours is to buy gold at current price levels or around 1,977. Another strategy would be to expect the XAU/USD pair to advance to the key point of resistance at 1,989 and then to sell with targets at 1,960 (200 EMA).
The eagle indicator is giving a positive signal on the 1-hour chart. Thus, we must be very careful with selling operations, it is better to wait for 1,990 to sell.