Early in the European session, Gold (XAU/USD) is trading at 1,878.71, below the 200 EMA and above the 21 SMA. On the H4 chart, we can see that gold is trading within the bullish trend channel formed at the beginning of the week and is approaching a strong resistance zone around 1,887.
In the next few hours, during the American session, US inflation data will be published during the American session. The CPI is expected to remain at 3.6%, one point down from the last month.
If the inflation data is above market expectations, it could favor the US dollar and it could put strong downward pressure on gold. On the contrary, the reading equal or lower could give a strong bullish impulse to gold and it could reach the 200 EMA at 1,886 and even reach the 61.8% Fibonacci around 1,894.
If we trace the Fibonacci retracement from the high of 1,947 to the low of 1,812, the 61.8% is located at 1,894. Gold could reach this level in the coming days and from that point, it could resume its bearish cycle until it covers the GAP it left at 1,831.
The eagle indicator is giving an extremely overbought signal. In the next few hours, a technical correction will occur towards 1,858 (21 SMA).
Our trading plan for the next few hours is to sell gold in case a pullback occurs towards 1,887 or at the current levels around 1,877. The key will be to wait for the publication of the US inflation data to make the right decision whether to buy or sell.
