Early in the American session, gold is trading around 2,488 within the downtrend channel forming since August 26 and bouncing after the price hit the low of 2,471 during the European session.
We can observe a pattern called double bottom which could be confirmed if gold consolidates above $2,500 in the next few days.
Gold is likely to try to break the downtrend channel. If the price consolidates above the 21 SMA, we could expect a resumption of the bullish cycle. So, it could reach 2,539 or even break this barrier and reach +2/8 Murray at 2,573.
If gold fails to consolidate above the psychological level of 2,500, it could be seen as a signal to resume selling. Therefore, we could look for short opportunities below the 21 SMA with targets at 2,480 and finally at the 200 EMA located at 2,463.
Our outlook remains negative as long as the gold price trades below 2,498. We will look for selling opportunities. The Eagle indicator is showing a negative signal which supports our bearish strategy.