Early in the European session, gold is trading at 2,647.35 with a slight technical bounce, within the secondary downtrend channel forming since September 25th, and within the main uptrend channel forming since September 10th.

Yesterday after hitting the low of 2,624, gold bounced just above the bottom of the uptrend channel, which in turn gave it a strong bullish momentum. From that point until now, we have been watching the recovery of gold. The price could continue its rise in the next few hours until it reaches 2,655.

Gold has strong resistance at 2,649, 2,653 and finally at 2,656. These levels coincide with the 21 SMA, the top of the downtrend channel and 6/8 Murray. We believe that gold could face strong rejection if the price reaches 2,656. Below this area, gold could resume its bearish cycle and it will be seen as an opportunity to sell.

On the other hand, in case gold consolidates above 2,660, the outlook could be positive. So, the instrument could reach 2,685 and finally, 7/8 Murray around 2,734.

The Eagle indicator is moving inside a bearish trend channel. We believe this current technical bounce could be seen as an opportunity to sell only if the XAU price settles below 2,660.