Early in the European session, gold was trading around 2,045.70 that is above the 21 SMA and below the 200 SMA. On the H1 chart, we can see a symmetrical triangle pattern formation.
It is likely that if in the next hours, the XAU consolidates below 2,050, we could expect a strong technical correction. If the downtrend continues in the coming days, it could reach last week's low at 2,025 and even reach the psychological level of $2,000 around 4/8 Murray.
In the coming hours, we can expect gold to consolidate below 2,050 (200 EMA) which could favor a negative outlook. Thus, we could sell because according to the eagle indicator gold has reached overbought levels and a strong technical correction is likely to occur in the coming days.
The market sentiment report shows that there are 57.58% of traders who are buying gold. According to our contrarian strategy, gold is expected to continue its bearish trend in the coming days. Still, we could also expect gold to consolidate around or above the psychological level of $2,000 which could allow us to buy on the rebound.
On the other hand, in case gold consolidates above 2,051 we could expect it to reach the top of the downtrend channel formed since December 26 around 2,057 or it could reach the 2,062 area (5/8 Murray) and which could also be seen as an opportunity to sell due to overbought technical levels.
