FX.co ★ Strategy of the day on the GOLD

Gold is currently testing the lower limit of its medium-term bullish channel at 1,571 suggesting a rebound. However, a break of these levels will free a large potential and initiate a violent bearish channel.

Technical indicators provide buy signals and, until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.

Gold is currently testing the lower limit of its channel, so we suggest 2 scenarios: the first one is the hypothesis of a rebound, then we recommend a buy on the level of 1,571 with the 1st objective at 1,581 and then at 1,583. A break through 1,568 will invalidate this scenario. The second scenario is a break of its support, then we recommend a sell stop, which means to sell the gold as soon as it has broken through its support of 1,571 with the 1st objective at 1,561 and then at 1,558. A break through 1,574 will invalidate this scenario.