The price of gold (XAU/USD) is trading around the psychological level of $1,900 and is consolidating around this area after breaking below the 200 EMA and the 21 SMA.
Now, on the H-1 chart, we can see that gold is showing extremely oversold signs, which is expected to cause a technical rebound in the next few hours and the instrument could reach 1,906 (21 SMA).
A sharp break above 2/8 Murray and above the downtrend channel could mean a trend reversal and we could buy with targets at 1,920 and 1,937.
The DXY (dollar index) rose sharply due to deteriorating market sentiment as investors weighed the Fed Chairman's comments to keep interest rates higher for longer. This generated a massive sell-off of gold and it depreciated by almost $50 in value compared to last week.
Only a sharp break in the downtrend channel and a consolidation above the 21 SMA and above 2/8 Murray on the 1-hour chart could mean a recovery for gold and it could reach 1,920 and 1,937.
On the contrary, in case it fails to break 1,906, we could expect the bearish cycle to continue and the metal could reach 1/8 Murray located at 1,890. It could even accelerate the decline if it breaks below this level and could reach the zone of 1,867 where it left a GAP in the month of February 2023.
Our trading plan for the next few hours is to buy gold only if it breaks above 1,906 with targets at 1,920 and 1,937. The eagle indicator is giving an imminent signal of a technical rebound which we could take advantage of to buy if gold overcomes the strong resistance of 2/8 Murray and 21 SMA.