Gold reached a new high around 2,354.14 during the European session. Since the market opened this week around 2,323 due to strong volatility and low liquidity, gold rose in a few hours to 2,254.
Although Friday's Non-Farm Payrolls data was favorable for the US dollar, gold ignored this data and rose after reaching the bottom of the bullish trend channel around 2,250 in just a few hours and gained more than $100. Given that the XAU/USD is in an overbought zone, a correction is likely to occur in the coming days.
In case the metal continues to rise, it should reach and break the strong resistance of 6/8 Murray located at 2,375. This level could be seen as a strong barrier for gold. Below this area, we expect a technical correction to occur.
According to the H4 chart, the eagle indicator reached the extremely overbought level around 95-points. It means that an imminent technical correction could occur during the American session. It is likely that gold could reach the 21 SMA located at 2,297.
A sharp break of the uptrend channel could change the trend of gold and we could expect a fall towards the 200 EMA located at 2,169.
Therefore, our trading plan could be to sell gold below 2,350, with targets at 2,312 and 2,297. Around 2,350, there are a weekly and daily resistance levels which could serve as a stop for gold. Below this level, we could look for opportunities to sell.
