FX.co ★ Trading Signal for GOLD (XAU/USD) for May 31, 2023: buy above $1,963 (200 EMA - bearish channel)

Early in the European session, Gold (XAU/USD) is trading around 1,954.06 below the 21 SMA and below the 200 EMA. The instrument can follow a bearish bias for the next few hours.

On the 1-hour chart, we can see that gold has been moving within a downtrend channel formed since May 17. Yesterday in the American session, gold reached the bottom of the downtrend channel (1,932.08) and from there began a strong technical rebound reaching the top of the downtrend channel (1,963.56) which coincided with the 200 EMA.

This recovery of more than $30 in the gold price in less than 24 hours could mean that it is preparing for a further bullish movement. So, the metal could reach the psychological level of $2,000 in the next few days.

We can see the formation of a symmetrical triangle which is likely to be broken soon. After the price consolidates below 1,950, we could expect a technical correction and the price could reach 7/8 Murray located at 1,937.

In case of a sharp break of the downtrend channel and a daily close above the 200 EMA (1,963), this could mean the start of a bullish scenario. In the short term, the instrument could reach 8/8 Murray around the psychological level of $2,000.

The eagle indicator reached the extremely oversold zone. Thus, we can expect a technical correction in the next few hours and then gold could resume its bullish cycle.

Our trading plan for the next few hours is to sell below 1,958 with the target at 1,937. If this scenario changes and gold consolidates above 1,963, the break of the symmetrical triangle could be confirmed and seen as a bullish sign and we could buy with targets at 1,980 and $2,000.