Early in the European session, gold is trading around 2,171.61, around the 21 SMA, and within a downtrend channel forming since March 6th. We observe a technical correction in gold that could continue in the coming days.
Gold found a strong resistance around 2,178, the level that coincides with the top of the downtrend channel. The price is likely to fall in the coming hours. If there is a sharp break of the uptrend channel, we could expect the price to reach 2,156 and even the level of 2,140.
In case there is a breakout and consolidation above the downtrend channel around 2,180, the outlook could be bullish and the instrument could reach 2,187 and even 2,218 which coincides with 7/8 Murray.
Since March 11th, the eagle indicator has been giving overbought signals. The odds are that gold will continue to make a technical correction in the coming days and could reach the key level of 2,125. Eventually, the price could even reach the 200 EMA located at 2,077.
Above 2,187, gold could resume its bullish cycle and below 2,156, the metal could start a trend reversal to the key support of 2/8 Murray at 2,062 in the short term.
