Early in the American session, gold (XAU/USD) is trading around 1,966, above the 200 SMA and below the 21 SMA. We can see that gold is trading within a downtrend channel formed since July 19 when it hit the high of 1,987. So, the bullish cycle is expected to resume.
In the next few hours, we expect a technical bounce at around 1,959 which could be seen as an opportunity to buy with the target at 1,968. Additionally, a sharp break above the 3/8 Murray and above the 21 SMA located at 1,968 could be seen as an opportunity to buy and the price could reach 1,987 and the psychological level of $2,000.
Only a sharp break and daily close below 1,957 would invalidate our bullish view and gold could reach 1,948, a level that converges with the 200 EMA on the 4-hour chart and ultimately, could reach 2/8 Murray located at 1,937.
Gold could rise to $2,000 before a strong trend reversal occurs. If the price returns below 1,957 on the daily chart, we could expect a technical correction towards 1,937 and 1,906. In the next few days, it could finally reach the psychological level of $1,900.
In the short term, the Eagle indicator is giving a positive signal because it has reached the extremely oversold zone, so the metal is likely to rebound above 1,959 in the next few hours. This could be seen as an opportunity to buy.
