Early in the Asian session, Gold (XAU/USD) is trading around 1,937.50, above the 21 SMA, and around the strong resistance of 6/8 Murray. On the H1 chart, we can see that at the opening of today's session, gold began with a strong upward movement, leaving a gap at about 1,922.
Gold has gained over $20 since opening trading today from 1,922 to 1,942, completely covering the GAP it left at 1,932. The instrument reached a new high around 1,942.50.
Technically, on the H4 chart, gold is very overbought. So, we expect a strong technical correction to occur in the coming days if gold falls below 1,942.
The negative outlook could be confirmed if gold breaks the bullish trend channel formed since October 13. The key turning point is located around 1,920. If this scenario occurs, then we can expect the metal to reach 5/8 Murray at 1,906 and even the 200 EMA at 1,889.
Gold is expected to consolidate below 1,942 in the next few hours, so we could expect a technical correction. It will give us an opportunity to sell with the target at 1,926. This level is the key for gold given that the bullish cycle could resume and the instrument could gain momentum. Therefore, we could expect it to reach 1,951 and 1,968.
The bearish force will prevail if gold breaks below 1,926. Then, we could expect it to continue falling and the price could reach 1,900, and even 4/8 Murray at 1,975.
