Early in the American session, XAU/USD is trading around $2,800, above the 21 SMA, and below the 8/8 Murray. A strong technical bounce is observed and gold is likely to continue rising in the next few hours until it reaches the 2,815 area where the daily R_2 is located.
If gold reaches its annual high (2,815 -2,828), a double-top pattern will be formed which could be seen as a technical reversal signal. Thus, we could sell the metal in the short term with the target at $2,600.
On the other hand, if gold consolidates above 2,813, the outlook could remain bullish. Hence, we could expect gold to reach +1/8 of Murray located at 2,851.
Technically, we could expect gold to make a strong technical correction because the price is approaching overbought levels on the daily and weekly charts.
The eagle indicator is showing a negative signal, reaching oversold levels. Therefore, after a technical correction towards 2,785 (21 SMA), gold could resume its bullish cycle.
