FX.co ★ Trading Signal for GOLD (XAU/USD) for July 20-21, 2023: sell below $1,983 (3/8 Murray - overbought)

Early in the American session, gold is trading around 1,973.94, above 21 and within the trend channel formed since early July.

During the European session, gold made a high at around 1,987.39 and since then we have seen a correction supported by the favorable unemployment claims data, released a few minutes ago. In the next few hours, we expect a bounce only if gold consolidates above the 21 SMA.

Gold could find strong support around 1,969 since the bottom of the bullish channel converges there. If this scenario comes true, it could be seen as an opportunity to buy with targets at 1,983 and at the psychological level of $2,000.

On the other hand, in case it reaches the 1,985 zone and fails to break it, this level could be seen as an opportunity to sell with targets at 1,968 and 1,946 (200 EMA).

A sharp break of the uptrend channel could change the trajectory of gold and we could expect that in the next few days, it will reach the 200 EMA located at 1,946, 1,937 and finally, 1,906 (1/8 Murray).

On July 19, the Eagle indicator reached the extremely overbought level which foretells a strong technical correction for gold. Therefore, any technical rebound and as long as it trades below the last high (1,987), could be seen as an opportunity to sell in the next few days.

Our trading plan for the next few hours is to sell below 1,983 or buy above 1,969. The Eagle indicator is giving a negative signal in which the best option would be to sell on the condition of a rebound.