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Gold has tested the upper limit of its medium term bullish channel at 1,742 and declined. It tests now the intermediate support of its channel at 1,730 supporting the hypothesis of a rebound. However, a break of these levels will free a good potential and enable the lower limit of its channel at 1,690.
Technical indicators do not provide clear signals and approach an 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. The superior band strengthens the upper limit of its channel supporting the assumption of a violent movement in case of failure.
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.
The material has been provided by Instaforex Company - instaforex.com
