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Gold bounced off to the lower limit of its medium term bullish channel and broke the intermediate resistance of this one leading to an acceleration. It tests now the upper limit of this channel at 1,744 suggesting a decline. However, a break of these levels will release good potential and initiate more violent bullish channel.
Technical indicators provide sell signals and evolve in overbuy zone supporting the assumption of a decline. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short-term. Furthermore, the spot rate evolves on the levels of the superior band strengthening the resistance.
As gold is currently testing the upper limit of its channel, we suggest 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 1,744 with the 1st objective at 1,732 and then at 1,730. A breakthrough of 1,747 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means buying the spot rate as soon as it is broken through its resistance of 1,744 with the 1st objective at 1,755 and then at 1,758. A breakthrough of 1,741 will invalidate this scenario.
