FX.co ★ Trading signal for GOLD on October 26 - 27, 2021: sell below $1,803 (overbought)

Gold is trading below the strong 6/8 murray resistance located at 1,812, after having bounced off the 21 SMA on Friday. The bullish power is ebbing away. Judging by the last 4-hour candle, the metal has failed to reach the 1,812 resistance, confirming that there could be a correction in the next few hours to the 21 SMA located at 1,794.

Yesterday, gold rose to 1,809 due to the decline in the yields of Treasury bonds. This makes investors take refuge in commodities. The 10-year benchmark rate for the US bond is at 1.61%, away from 1.70% for now. In addition, gold is benefitting from the weakness of the US dollar. Its index is now consolidating above the 200 EMA around 93.60.

According to the 4-hour chart, we can see that gold remains within an uptrend channel. This means that any retracement could be an opportunity to continue buying. The immediate level where we can expect a technical rebound is the 21 SMA located at 1,794. That level suggests a good buying opportunity.

On the other hand, we can also observe that the eagle indicator has reached the level of 95. This means that an imminent correction could occur in the next few hours. Therefore, it would be a good opportunity to sell at the current levels of $1,803. Alternatively, if gold makes a pullback towards 1,812, it will be a good selling point also given that there is the resistance of 6/8 murray.

Our strategy in the next few hours is to sell because gold is at the overbought levels. This would mean that we have the opportunity to sell as long as gold remains below 1,812. We can place a take profit at 21-SMA and 5/8 of murray around 1,781.

Medium-term outlook remains bullish for gold as it sits on 4-hour charts above the 200-day moving average (1,770), meaning that any bounce around this level will be considered a good point to continue buying. In addition to this, if gold breaks above 1,812 and consolidates above this level, it will be a sign that the bullish trend prevails and could rise to 7/8 at 1,843.

Support and Resistance Levels for October 26 - 27, 2021

Resistance (3) 1,820

Resistance (2) 1,812

Resistance (1) 1,803

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Support (1) 1,796

Support (2) 1,788

Support (3) 1,781

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A trading tip for GOLD for October 26 - 27, 2021

Sell below 1,803 (SMA 21) with take profit at 1,795 (SMA 21) and 1,781 stop loss above 1,812.