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After the strong increase of the last week, the gold have tested the upper limit of its medium term bearish channel at 1,627 and demonstrated a decline. It broke yesterday the intermediate support of this one at 1,594 leading to acceleration. A pull back on these levels is expected before reach the lower limit of its channel to 1,540.
Technical indicators provide sell signals suggesting the continuation of the decline but are approaching oversell zone supporting the assumption of a pull back. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
Given that the assumption of a pull back is most likely, we recommend to sell gold on the levels of 1,594 with the 1st objective at 1,584 and then at 1,580. A breakthrough 1,597 will invalidate this scenario.
