Gold is currently testing the lower limit of its medium term bullish channel at 1,758 suggesting a rebound. However, a break of these levels will free a large potential and initiate a bearish channel.

Technical indicators do not provide clear 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. Furthermore, the gold evolves at the levels of the inferior band supporting the hypothesis of a rebound.

As gold is currently testing the lower limit of its channel, we recommend 2 scenario: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1,758 with the 1st objective at 1,768 and then at 1,770. A breakthrough of 1,755 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1,758 with the 1st objective at 1,748 and then at 1,745. A breakthrough of 1,761 will invalidate this scenario.