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Gold has been evolving between 1,753 and 1,780 for one week and approaches now the lower limit of its medium-term bullish channel at 1,755 suggesting a rebound. However, a break of these levels will release a large potential and initiate a violent bearish channel.
Technical indicators provide sell signals but until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have stabilized showing a more regular volatility. Furthermore, the inferior band strengthens the lower limit supporting the hypothesis of a rebound.
As gold is currently testing the lower limit 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 1,755 with the 1st objective at 1,765 and then at 1,768. A breakthrough of 1,752 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 1,755 with the 1st objective at 1,745 and then at 1,742. A breakthrough of 1,758 will invalidate this scenario.
