Early in the Asian session, Gold (XAU/USD) is trading around 1,869.03, below the 200 EMA located at 1,879 and below the 6/8 Murray located at 1,875.
We can see that gold is under strong bearish pressure. It is a sign that the asset is oversold, so a technical bounce could occur in the next few hours.
On February 2, gold reached a high at 1,959.67. After this rally, XAU/USD made a strong technical correction of approximately $100 in price.
Today, gold hit a low last seen on January 6 at 1,859.54. According to the Japanese candlestick analysis, the last two daily candlesticks represent an engulfing candlestick, which means that the market is preparing for a trend change in the coming days. This could be a clear sign of a technical reversal in the short to medium term.
In the next few hours, we expect gold to continue to bounce from the low of 1,860 until reaching the resistance of the 200 EMA and the daily pivot point around 1,882. Around this zone, gold will come under bearish pressure and could resume its downward cycle.
On the other hand, in case gold consolidates above the downtrend channel, which was broken around 1,885, it could be a clear signal to buy with targets at the psychological level of 1,900.
Our trading plan for the next few hours is to wait for gold to reach the 1,882 area to sell with targets at 1,860 and 1,849. The eagle indicator is giving a negative signal. Therefore, a strong rejection around the 200 EMA is highly probable, thus suggesting a selling opportunity.
