Gold is trading around $4,271 after consolidating above $4,218. XAU/USD made a strong upward move yesterday during the US session, reaching a high of around $4,287.
Gold tested the top of the uptrend channel formed since early December, which also coincided with the top of the uptrend channel formed since November 7. Both levels act as strong barriers to gold, so we believe a technical correction could occur below $4,286 in the coming days.
Gold could undergo a technical correction in the coming hours and could reach the key 7/8 Murray support around $4,218. Even if the bearish force prevails, we could expect it to reach the 200 EMA around $4,125.
If gold breaks and consolidates above $4,285 in the coming hours, we could expect it to continue its bullish cycle and could reach the 8/8 Murray around $4,375, but this is unlikely.
As long as the price continues to trade within the uptrend channel formed since early November, we could expect a technical correction to occur in the coming hours, which would be seen as a signal to open short positions if the price consolidates below $4,285.
The Eagle indicator is showing negative signals, so our strategy will be to sell in the coming hours with targets at $4,240, $4,215, and the instrument could even reach $4,190.
