Early in the American session, gold (XAU/USD) is trading around 1,834.47. The asset is making a strong reversal, having reached 7-month highs. Gold is below the 7/8 Murray line which represents a technical reversal. Any technical rebound towards this zone in the next few hours will be considered a sell signal.
Yesterday during the European session, XAU/USD returned to the levels of May 2022, reaching the level of 1,849.37. The current setback is due to a strengthening of the US dollar but we could expect a recovery in gold in the next few hours and it could reach the 1,844 - 1,850 zone again.
According to the 4-hour chart, we can see that gold is in a strong uptrend and it is likely that there will be a technical bounce in the next few hours and the price could reach 7/8 Murray and the high of 1,849. In case it fails to consolidate above this level, a double-top pattern could be formed which would be a clear signal for a technical reversal.
For this reason, the eagle indicator reached the extremely overbought zone. Therefore, any bounce in gold and as long as it consolidates below the psychological level of 1,850 could be seen as an opportunity to sell.
Our trading plan for the next few hours is to wait for gold to reach the 1,845 area to sell, with targets at 1,830 and 1,817 (21 SMA). The eagle indicator is giving a negative signal. Any technical bounce will be seen as a signal to sell.
