Gold (XAU/USD) in the Asian session fell to a low of 1,931.97. It is currently trading 1,839 below the 200 EMA and inside a downtrend channel formed since April 18.
The daily chart shows that XAU/USD is falling for the third day in a row. The bias is still bearish, however the chart is showing signs of exhaustion and the metal is oversold.
Gold has a strong bottom around 1,819, weekly support, and a little further down is -2/8 Murray around 1,812.
Gold could bounce around 1,819 which could favor a recovery and it could reach 1,858 where the 200 EMA is located and the top of the downtrend channel. This level represents an area of an imminent technical bounce.
The eagle indicator reached the extreme oversold level around 5-points. This is a sign of an imminent technical bounce. In the next few hours, gold is likely to reach the zone of 1,860.
A sharp break above 1,858 and a daily close above the 200 EMA located at 1,860 will mean easing bearish pressure and the price could move higher and reach the 21 SMA located at 1,908.
On the other hand, the 200 SMA located at 1,833 provides dynamic support. If gold manages to consolidate above 1,931 in the next few hours, it is likely that it could continue its upward movement until 1,858.
Our trading plan is to buy in case of a technical bounce around 1,819 or sell in case of a pullback towards 1,898. The eagle indicator is oversold which supports our bullish strategy.
