FX.co ★ Strategy of the day on GOLD

Gold approaches the lower limit of its medium term bearish channel at 1.325 suggesting a rebound. However, a break of these levels will free up a large potential and initiate a more violent bearish channel.

Technical indicators provide sell signals but evolves in oversell zone and 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.

Gold is currently testing the lower limit of its channel - then we suggest 2 scenarios: The first one is the hypothesis of a rebound - then we recommend a buy on the level of 1.325 with the 1st objective at 1.335 and then at 1.338. A break through 1.322 will invalidate this scenario. The second scenario is a break of its support then we recommend a “sell stop” that means to sell the gold as soon as it has broken through its support of 1.325 with the 1st objective at 1.315 and then at 1.312. A break of 1.328 will invalidate this scenario.