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Since September 7 gold has been evolving between the upper limit of its medium term bullish channel at 1,755 and the intermediate support of this one at 1,730. It tests now the intermediate support suggesting a rebound. However, a break of these levels will release a large potential and enable the lower limit of its channel at 1,695.
Technical indicators do not provide clear signals but approach overbuy zone and until the support is not broken, the assumption of a rebound is most likely. Bollinger bands are much discarded as a result of a strong increase of these days. Stabilization is expected in a short-term.
As gold is currently testing the intermediate support of its channel, we suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1,730 with the 1st objective at 1,740 and then at 1,745. A breakthrough of 1,727 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1,730 with the 1st objective at 1,720 and then at 1,715. A breakthrough of 1,733 will invalidate this scenario.
