Early in the European session, gold (XAU/USD) is trading at 1,714.33. Yesterday in the American session, gold managed to consolidate above the 21 SMA located at 1710, giving it a positive outlook for the coming days.
Gold is currently trading above the 21 SMA and below the 3/8 Murray. Both levels could be acting as immediate support and resistance.
On the 4-hour chart, we can see the formation of a double bottom technical pattern located at 1,688 and another at 1,691. This technical pattern represents the probability that XAU/USD could go ahead with the uptrend and could reach 200 EMA located at 1,744.
On September 7, the eagle indicator reached the 5-point level which represents an extremely oversold zone. In the coming days, gold is likely to break sharply the downtrend channel which has been underway since August 8. So, the price could reach the level of 1,750 and even reach 5/8 Murray at 1,781.
Market sentiment shows that investors continue to take refuge in the US dollar and this in turn is reflected in the high yields of Treasury bonds. Both assets are negative factors for XAU/USD.
In the medium term, the outlook remains bearish for gold. This, in turn, suggests that any recovery attempts could be seen as a selling opportunity.
Our trading plan is to buy above the 21 SMA located at 1,710. Additionally, a sharp break above the downtrend channel of around 1,718 will be seen as an opportunity to buy with targets at 1,744(200 EMA) and 1,750.
