Early in the American session, Gold (XAU/USD) is trading around 1,817.96 above the key 6/8 Murray support and above the 21 SMA and 200 EMA showing signs of exhaustion.
Market bulls keep XAU/USD above the psychological level of 1,800.00, trading near its recent high of 1,824.53. With a daily close above this level, we would expect gold to approach the 1,830 zone. The metal could reach 7/8 Murray around 1,843.
The daily chart of the XAU/USD pair shows that it has lost its bullish momentum, but the risk remains biased to the upside. Gold continues to trade above all of its moving averages, while the 21 SMA crosses above the 200 EMA, converging around 1,784. The eagle indicator is giving extremely overbought signs. Amid low liquidity due to the Christmas holidays, gold could consolidate between 1,823-1,800.
In the daily chart, we can see that gold remains within an uptrend channel, which is likely to be a technical correction. Since it is trading in the overbought zone, we could expect it to fall towards the 21 SMA located at 1,785.
The key is to wait for the XAU/USD pair to drop below 1,812. It will be a clear signal to sell with targets at 1,800 and 1,784. The metal could even hit 5/8 Murray around 1,781. Finally, if gold gets stuck under the bearish pressure, it could reach the 200 EMA located at 1,764.
Our trading plan for the next few hours is to sell below 1,818 - 1,823, with targets at 1,812, 1,800 and 1,785. The eagle indicator is giving extremely overbought signals, which supports our bearish strategy.
