Early in the European session, gold is trading around 2,016.72, above the 200 EMA and below the 21 SMA. On the 1-hour chart, we can see that gold has been trading within a downtrend channel formed on May 3.
Last week, the XAU/USD pair reached a high of 2,077.97 after the FOMC meeting and made a strong technical correction towards the psychological level of 2,000 following the release of the US NonFarm Payrolls (NFP) report.
A technical correction of $78 in the price of gold in less than 48 hours makes us think that gold is likely to continue to rise in the next few hours only if it breaks and consolidates above 2,031.
The weekly chart shows that gold has left a triple top technical reversal pattern. If gold trades in the next few days below +1/8 Murray located at 2,062, it could stay under bearish pressure and could reach 7/8 Murray around 1,937.
According to the 1-hour chart, we can expect gold to reach the 2,025 zone in the next few hours, a level that coincides with the 21 SMA and the weekly pivot point. This level also coincides with the top of the downtrend channel and if it fails to break, we could expect a continuation of the bearish move toward 2,012, 2,000, and finally to 1,984.
Conversely, a break and consolidation above 2,031 could send the price risisng toward +1/8 of Murray located at 2,062 which could mean a resumption of the bullish cycle.
The eagle indicator is reaching the oversold zone, which suggests that gold could bounce in the next few hours and then resume its bearish cycle, or it could continue to rise if it breaks above the 2,030 level.
