XAU/USD is trading with a strong bullish bias, reaching levels near $5,600 and leaving several gaps that have not yet been closed or filled. This technical pattern warns us about a strong technical correction of more than $1,000 in the coming days, with the price returning to levels around $4,533.
The H4 chart shows that gold has reached the +2/8 Murray zone, which represents extreme overbought conditions.
Technically, it has reached the upper band of the uptrend channel. Hence, a strong technical correction is likely to occur below $4,600 in the coming days.
If gold reaches the +2/8 Murray in the coming hours and encounters strong rejection around this zone, it will be seen as an opportunity to open short positions with targets at $5,312 and around the psychological level of $5,000.
A sharp break below the uptrend channel and consolidation below the 21 SMA located at $5,210 could signal a change in trend. Therefore, we could expect it to reach the 200 EMA around $4,650 in the medium term.
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