Early in the European, session gold (XAU/USD) is trading around 2,037.04, below the 21 SMA, and within the uptrend channel formed since November 10. We can see on the 4-hour chart that gold made a strong technical correction after reaching the all-time high of 2,144.46.

The rebound around 2,020 coincides with the bottom of the bullish trend channel. So, gold is expected to continue rising in the next few hours and could reach the 21 SMA at 2,050. If gold reaches this area and fails to consolidate above the moving average, it will be seen as an opportunity to sell with the target at 2,025.

On the contrary, if the bearish pressure gains momentum, initial support can be detected around the psychological level of $2,000. This area could act as a strong bottom in case of prolonged weakness, but a drop below this area could indicate a deeper retracement and the beginning of a trend change with the next target at the 200 EMA located at 1,988 and 1,937(3/8 Murray).

Gold could consolidate above 2,020 in the next few hours. As long as the metal continues to trade within the uptrend channel, it could be seen as an opportunity to buy with the target at 2,050. On the other hand, a sharp break of the trend channel and a daily close below 2,020 could signal a change in trend for the coming days.

Our trading plan for the next few hours is to sell gold in case there is a bounce around 2,050 or around 2,062. Both areas could be seen as an opportunity to sell.