In the European pre-market, XAU / USD (gold) is trading above the SMA of 21 right in the same zone of the 8/8 of murray, forming a symmetrical triangle pattern. The market is still hesitant to determine a further trajectory on gold. The precious metal is showing a sign of depletion.
Yesterday Gold was trading within a range forming the symmetrical triangle, bouncing off the dynamic support of the 21 SMA. Now the key level to watch is $1,875. There is the strong resistance of 8/8 of murray, for now it has become the support for gold.
However, the 4-hour chart shows a break and consolidation below the murray math line (8/8). That coincides with $1,875 and a consolidation below the 21 SMA The sharp break of the symmetrical triangle will be a bearish signal that could fall to the area of the 200 EMA located at $1,845.
On the contrary, a sharp break above the symmetrical triangle and a consolidation above $1,882 will be a signal to continue buying with targets at $1,900. The psychological level and $1,906, +1/8 murray zone prove that the metal is extremely overbought.
Commonly, gold has a negative correlation with the dollar index. The US Dollar is likely to find support at near 89.62. There could be a technical rebound which could push gold down, and it could fall below $1,875.
The technical reading of the eagle indicator shows that it continues with the bearish signal, as the moving line of the indicator approaches the 10 level area of oversold. Gold is likely to make a downward correction in the coming days.
Support and Resistance Levels for May 21 – 24, 2021
Resistance (3) 1,901
Resistance (2) 1,893
Resistance (1) 1,885
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Support (1) 1,869
Support (2) 1,865
Support (3) 1,856
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Trading tip for GOLD for May 21 - 24, 2021
Sell bellow $1,875 (SMA 21 and 8/8), with take profit at $1,845 (7/8 of EMA 200), stop loss above $1,882.
Buy stop $1,882 (symmetrical triangle), with take profit at $1,900 and $1,906 (+1//8), stop loss below $1,875.
The material has been provided by InstaForex Company - www.instaforex.com