GOLD is trading around $3,885. It is about to close the gap that opened on October 30 around $3,875, and is likely to continue falling in the coming hours until it closes that gap; it could even reach the low from that date, around $3,869.
On the H4 chart, gold shows strong bearish potential after attempting to break above $4,062—where the Murray 2/8 level sits—which is acting as strong resistance and has triggered this sharp decline; it is likely to find solid support around the daily S_3 level at $3,859.
Given that gold's objective is to close the gap left on October 30 and then resume its uptrend, we must be prepared for a strong technical rebound. Above $3,859, the outlook could be positive, and we could expect gold to return to the psychological level of $4,000.
In the medium term, if we look at the next gap that gold has left unfilled, it is around $4,273; technically, if the price moves back above the 200-day EMA and above the 21-day simple moving average (SMA), it could reach this level in the coming days.
Our trading plan for the next few hours is to sell below $3,906 with a target of $3,975 to close the gap, and we could even continue selling until the price reaches the daily S3 level, around $3,859. This area could provide strong support for gold, and we could expect a technical rebound.
Our aim is to wait for consolidation above $3,850; if the price remains above this zone, we could buy in anticiation of the price returning to the Murray 2/8 level, around $4,062.
