Gold is trading around 3,377, undergoing a technical correction after reaching strong weekly resistance around 3,385. This level could offer an opportunity for bears, as a technical correction is expected to occur to the 5/8 Murray level at 3,320.
Last Friday, the XAU/USD, after breaking out of the downtrend channel formed on July 22, made a strong upward movement, surpassing the 21SMA, the 5/8 Murray level, and the 200 EMA. This suggests that we could expect consolidation above 3,340 in the coming days.
In the coming hours, we can sell gold below 3,385 with targets at the 6/8 Murray level at 3,359. If gold breaks below this area, we could resume short positions with targets on the 200 EMA at 3,325 and finally on the 5/8 Murray at 3,320.
From Friday to Monday, gold has recovered more than $100 from its price of 3,281. This suggests that we can anticipate a 50% technical correction, during which the instrument is likely to reach area of 3,330 to 3,320 in the coming days.
The Eagle indicator is giving a positive signal, so we should wait for a technical correction to occur and then take action. The key point to keep in mind is that the price remains above the 5/8 Murray level.
