Early in the European session, Gold (XAU/USD) is trading around 1,992.42 below the 200 EMA and below the 21 SMA. On the chart above, we can see that gold is trading within a bearish trend channel formed since the beginning of May.
Yesterday in the American session, gold reached the low of 1,986.69. Since then, we have observed a technical bounce and now the price could face strong resistance around the daily pivot point located at 1,997.
In case gold returns above the psychological level of $2,000, we could expect it to continue rising. The instrument could reach the 21 SMA located at 2,009 and finally, it could face the top of the downtrend channel which could act as strong resistance.
If gold gains bullish momentum and breaks above 2,010, this could be the start of a bullish scenario and in the short term, it could reach +1/8 Murray located at 2,062.50.
Conversely, in case gold trades below $1,995 (200 EMA), we expect bearish pressure to prevail. So, the metal could reach 1,971 which was tested on April 21. If this support is broken, it could accelerate its downward movement to the 7/8 Murray zone located at 1937.50.
As gold trades within the downtrend channel, we would expect it to move around 2,010 (resistance) to 1,937 (support). The Eagle indicator reached the oversold zone. Gold could gain momentum above 2,010 and start a new bullish cycle.
Our trading plan for the next few hours is to sell below the psychological level of $2,000, with targets at 1,970 and 1,937. The levels above 2,010 could be seen as an opportunity to buy, as this will mean XAU/USD has broken the bearish channel and could start a new uptrend.