FX.co ★ Trading Signal for GOLD (XAU/USD) for May 4-5, 2023: buy sell below $2,050 (21 SMA - overbought)

Yesterday, in the minutes before the American session closed, gold (XAU/USD) made a strong upward movement and spiked to the level of 2,077.79, an all-time high so far.

Today in the European session, gold is trading around 2,045.30 below +1/8 Murray (2,062) and below the 2,050 daily R_1. We can see a strong technical correction so that the price could reach the 21 SMA around 2,027 in the next few hours.

Yesterday, the US interest rate decision was announced, though investors had already priced in this increase. hence, we saw a strong movement in gold above the monthly support of 1,977-2,077. In just three days, gold appreciated its value by $100. A strong volatile movement and a technical correction are likely to follow in the next few days.

On the 1-hour chart, we can see that gold left a gap around 2,039 and it is likely that in the next few hours, it could cover this gap and reach a pivot point around 2,027.92.

Gold is expected to continue falling in the next few hours until it reaches the 21 SMA located at 2,027. Around this level, we expect a technical rebound to resume buying operations, with targets at 2,050 (R_1 daily) and 2,062 (+1/8 Murray).

On the other hand, in case gold falls below 2,027 (21 SMA), the technical correction is likely to accelerate and the instrument could reach the psychological level of $2,000 that coincides with the 8/8 Murray line and the 200 EMA.

The Eagle indicator has reached overbought levels. So, any technical bounce below 2,062 could be exploited as an opportunity to sell.

Our trading plan for the next few hours is to sell below 2,050 with a target at 2,027 and wait for a technical bounce around the 21 SMA to buy with a target at 2,062.