Early in the American session, gold (XAU/USD) is trading around 1,939.78, below the 21 SMA and 200 EMA and inside a downtrend channel formed on July 26. Gold is managing to recover after the strong bullish move, sparked last week by the Non-Farm Payrolls.
On the 4-hour chart, we can see the formation of a bullish pennant pattern. It is expected that in the next few hours it breaks above 1,942, the sign of this pattern could be confirmed, and we could expect it to reach EMA 200 located at 1,949.92 and up to 7/8 Murray in 1,968.
On the other hand, in case gold falls below 1,930 we could expect a downward acceleration, and it could reach 1,918 and finally 5/8 Murray at 1,906.
Since August 1, the Eagle indicator has been giving positive signals, so gold is likely to resume its bullish cycle in the coming days.
Upon a break above 1,942 and 1,950, we could expect a sustained uptrend and this could reach the psychological level of $2,000.
The downtrend channel formed since June 26 is keeping gold under bearish pressure. In case there is a break of this channel, it could be a change of trend and could be seen as an opportunity to buy.
The 6/8 Murray support located at 1,937 is the key to define the trend for the next few days. Above this level, buy orders will be favorable and below sales will accelerate.
Our trading plan for the next few hours is to buy gold in case it breaks in 1,942, with targets in 1,950 and 1,968. Or wait for a rebound at 1,931 to buy with the target of 1,968. The Eagle indicator is giving a positive signal, supporting our bullish strategy.