FX.co ★ Strategy of the day on the GOLD

Gold approaches the lower limit of its medium term bearish channel at 1,639 suggesting a rebound. However, a break of these levels will free a large potential and initiate a more violent bearish channel.

Technical indicators do not provide clear signals but until the support is not broken, the assumption of a rebound is most likely. Bollinger bands are much discarded as a result of a strong decline these days. Stabilization is expected in a short term.

As gold is currently testing the lower limit of its channel, we recommend 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1,639 with the 1st objective at 1,649 and then at 1,653. A break through 1,636 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the gold as soon as it is broken through its support of 1,639 with the 1st objective at 1,629 and then at 1,626. A break through 1,642 will invalidate this scenario.