Gold is trading around 2,159.66, below the 21 SMA, and inside a downtrend channel forming since March 6. During the European session, the metal printed a low of 2,146. It has been bouncing from that level but is now facing a strong resistance zone. If rejected, we could expect the bearish movement to resume and in the short term, the price could reach 200 EMA located at 2,090.
If gold breaks and consolidates at 2,165 and above the 21 SMA, the outlook could be positive and we could expect it to reach 2,187. Beyond this area, it could reach a psychological level of 2,200. The odds are that gold will reach it because the instrument is showing oversold signs.
On the other hand, if gold trades below the key level of 2,187 in the coming days and fails to break above this level, it could be seen as a double-top pattern which would also allow us to sell below this area. As a result, gold could reach the level of 2,093 in the medium term.
We expect gold to continue trading within the downtrend channel in the coming hours. A drop to the bottom of this channel could find a good support point around 4/8 Murray located at 2,125 which could be seen as a buying opportunity, with the target at 2,160.
