FX.co ★ Strategy of the day on the GOLD

Gold approaches the upper limit of its medium-term bullish channel at 1,438 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.

Technical indicators do not provide clear signals but, until the resistance is not broken, the assumption of a decline 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 upper limit of its channel, so we recommend 2 scenarios: the first one is the hypothesis of a decline, then we recommend a sell on the level of 1,438 with the 1st objective at 1,428 and then at 1,426. A break through 1,440 will invalidate this scenario. The second scenario is a break of its resistance, so we recommend a buy stop, which means to buy the gold as soon as it breaks through its resistance of 1,438 with the 1st objective at 1,448 and then at 1,450. A break through 1,435 will invalidate this scenario.