FX.co ★ Strategy of the day on the GOLD

Gold is currently testing the intermediate support of its medium-term bearish channel at 1,589 suggesting a rebound. However, a break of these levels will free large potential and reach the lower limit of its channel at 1,579.

Technical indicators do not provide clear signals, but until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.

Gold is currently testing the intermediate support of its channel, so we suggest 2 scenarios: the first one is the hypothesis of a rebound, then we recommend a buy on the level of 1,589 with the 1st objective at 1,600 and then at 1,602. A break through 1,586 will invalidate this scenario. The second scenario is a break of its support, then we recommend a sell stop, which means to sell the gold as soon as it has broken through its support of 1,589 with the 1st objective at 1,579 and then at 1,576. A break through 1,592 will invalidate this scenario.