Early in the American session, gold is trading around 2,680 with a bullish bias and reaching a resistance zone. This area embraces the high of 2,685 and the daily R_2. We believe that gold could face this zone, so we could expect a strong technical correction to follow.
Gold could reach the top of the bullish trend channel around 2,700, a key psychological level. That is why we believe that if a strong break above 2,685 occurs, gold could reach 2,700-2,706.
According to the H1 chart, gold is reaching an overbought zone. Therefore, we believe that below 2,685, we could look for opportunities to sell with targets at 2,675 and 2,660, the area where the 21 SMA and the bottom of the bullish trend channel converge.
In turn, a break and consolidation below 2,656 on the H4 chart could mean a change in trend. Hence, gold could sink to 2,602 and even 1/8 Murray at 2,578 in the coming days.
