In the early European session, Gold (XAU/USD) is trading around 2,174.74, above the 21 SMA, and above 5/8 Murray. On Wednesday after the Fed's policy announcement, gold made a strong upward move reaching 2,222 and then made a strong technical correction, in less than 24 hours erasing more than 80% of the gains.

Because gold is consolidating around the 2,170 level where the 21 SMA is located, a technical bounce above this area could occur in the next hours. In case a bounce happens around the bottom of the uptrend channel at 2,165, it will be seen as a buying opportunity with targets at 2,187 and 2,218.

Technically and according to the H4 chart, gold is showing negative signals. It is likely that if it falls below 2,156, the price could break the uptrend channel.

If this scenario occurs, it could be the beginning of a trend change and we could expect the metal to reach 4/8 Murray located at 2,125 in the short term and finally, the 200 EMA located at 2,105.

We believe that gold could consolidate above 2,156 in the coming days. This is a key level to pay attention to. We reckon that above this level gold could resume its bullish cycle and we would look for buying opportunities with the target at 2,187. At the same time, this level is a strong resistance and could be seen as a selling opportunity.

As we can see in the chart, gold is oversold and we could expect a technical rebound to occur in the next few days around 2,165, 2,162 and finally, at 2,156. Any of these areas will be good points to buy. Below this last level, we should avoid buying and we could look for opportunities to sell or place a stop loss.