Early in the European session, gold (XAU/USD) was trading around 2,043.16 which is below the 21 SMA and the 200 EMA. On the H1 chart, we can see that gold was trading within a downtrend channel formed on December 27th. In the next few hours, the XAU may continue to fall only if it remains below the 200 EMA (2,055).
Gold broke sharply out of the downtrend channel, but could return to trading within this channel if it consolidates above 2,048. If this scenario occurs, we could see a bullish move with targets at the 200 EMA located at 2,055. The price could even reach the top of the downtrend channel located at 2,064.
If in the next hours, gold trades below 2,046 (21 SMA) where the daily pivot point is also located, it could be seen as an opportunity to resume selling, and the price could return to 2,030 (yesterday's low), and even reach 4/8 Murray located at the psychological level of $2,000.
According to the eagle indicator, on January 3, gold encountered an extremely overbought zone and since then we have seen a technical rebound that originated around 2,030. If in the next few hours, gold continues to rise and consolidates above 2,046, it could resume the bullish cycle and this will be seen as a buying opportunity with targets at 2,065.
