At the beginning of the American session, gold (XAU / USD) is trading below the 21-moving average, located at 1,795. The metal is approaching the bottom of the uptrend channel that has been formed since September 27. It has remained intact during a period of more than a month. Each time, gold hits support and rebounds, it is likely to move in the same manner again.
Gold is expected to make a good bounce above the uptrend channel support. On the contrary, if it breaks this channel and consolidates below 1,790, it will be a negative sign of weakness and gold is likely to make a rapid decline to the EMA of 200. 5/8 of murray converges at the same level around 1,781.
The key level is located at 1,781-1,779 since there is the 200-day moving average. As long as the price remains above this level, the outlook for the precious metal remains bullish. A daily close and a consolidation below 1,780 could be the start of a bearish scenario. It is likely that next week we could see a drop of the gold price to the level of 1,750 around 4/8 of a murray.
The US dollar is putting pressure on gold as it has managed to bounce above 3/8 murray and now sits above the 200 EMA. USDX is likely to keep pushing gold down. Another factor may be that investors are taking refuge in the dollar in light of the uncertainty of the Fed's monetary policy forecast for November. So, gold is likely to fall to the 1,750 level in the coming days.
If gold manages to stay above 1,780 and above the dynamic support of the 200 EMA, there is still the possibility that it will continue to rise and move within an uptrend. If this happens, the gold price could rise to the 1,812 level and up to the 1,843 level where there is strong resistance of 7/8 of the murray that represents a reversal zone.
Market sentiment report on gold shows that there are 77.72% of traders who are selling gold. This is a positive sign. Gold is likely to find support around 1,780-1,770 and could give it a further upward momentum and could again rebound to the level of 1,812 and even higher to 1,840.
The eagle indicator reached the level of 90 points yesterday. This means that the market is overbought. So, an imminent correction is likely to happen in the next few hours. This could also favor our selling strategy if gold stays below 1,790 as long as the uptrend channel is broken.
The trading plan for the next few hours is to sell below the 21 SMA located at 1,795. If the uptrend channel is broken, we could continue selling below 1,790 with targets at 1,780. If this level is broken, we could carry on selling until 1,750 in the short term.
Support and Resistance Levels for October 29 - November 01, 2021
Resistance (3) 1,812
Resistance (2) 1,808
Resistance (1) 1,800
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Support (1) 1,788
Support (2) 1,781
Support (3) 1,772
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A trading tip for GOLD for October 29 - November 01, 2021
Sell below 1,795 (SMA 21) or if breaks 1,790, with take profit at 1,781 (5/8) and 1,750 (4/8), stop loss above 1,800-1,796.
