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Gold is currently testing the upper limit of its long term trading range at 1,778 suggesting a decline. However, a break of these levels will release good potential and initiate a violent bullish channel.
Technical indicators provide buy signals but approach overbuy zone and until the resistance is not broken, the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short-term.
As gold is currently testing the upper limit of its trading range, we suggest 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 1,778 with the 1st objective at 1,768 and then at 1,765. A breakthrough of 1,781 will invalidate this scenario. The second scenario is a break of its resistance where we recommend a “buy stop” which means buying the spot rate as soon as it is broken through its resistance of 1,778 with the 1st objective at 1,788 and then at 1,792. A breakthrough of 1,775 will invalidate this scenario.
