Early in the American session, Gold (XAU/USD) is trading around 1,677 above the 200 EMA and below the strong resistance of 6/8 Murray.
On the 4-hour chart, we can see that gold broke sharply the rectangle pattern above 1,667. Since Oct 20, gold has been trading within this pattern and now as long as it consolidates above 1,665, it could continue to rise. So, the asset could reach 1,687 and even 7/8 Murray at 1,718.
In case the price returns below this rectangle pattern and below the 200 EMA located at 1,665, it will be a clear signal to sell with targets at 1,651 (21 SMA).
XAUUSD has strong resistance at 1,680-1,687. While trading below this level, the metal is expected to fall towards the support of 1,665.
The NFP report from the US showed that the economy added 261,000 new jobs in October, compared to 200,000 in the consensus. Investors speculate a 0.5% rate hike for December and believe the Federal Reserve could slow the pace of future rate hikes which could entail the US dollar's weakness.
US inflation data will be released this week. Meanwhile, gold is expected to trade within a price range of 1,687 to 1,665. Below 1,660, it could change its direction and gold could enter a bearish phase.
Our trading plan for the next few hours is to wait for a pullback towards the 1,681-1,687 resistance zone to sell with targets at 1,665. On the other hand, we expect a technical bounce at around 1,665 to buy. The eagle indicator is showing an overbought signal and a technical correction is likely to follow in the next few hours.
