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Gold is currently testing the upper limit of its medium-term bearish channel at 1,713 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators do not provide clear signals, and until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in the recent days showing a decline in volatility and the imminence of a violent movement.
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 on the level of 1,713 with the 1st objective at 1,703 and then at 1,700. A breakthrough of 1,716 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy gold as soon as it is broken through its resistance of 1,713 with the 1st objective at 1,723 and then at 1,726. A breakthrough of 1,710 will invalidate this scenario.
