XAU/USD is trading around $4,126, consolidating below the 21 SMA and below the 1/8 Murray level, although yesterday during the US session, gold was unable to break above $4,140, and we saw a technical correction.

Gold is currently trading below a strong resistance level. We believe that if it fails to break above $4,140 again, we could expect a technical correction in the coming hours toward the 0/8 Murray line around $4,062.

Conversely, if there is a strong, decisive break above the downtrend channel, followed by consolidation above the 21 SMA and above the 1/8 Murray level, this could be a favorable scenario for gold, and we could expect it to quickly reach the 2/8 Murray level around $4,218. Ultimately, we expect it to reach the 3/8 Murray level around 4,296.

The gap left on September 25 offers hope that gold will return to these levels, as technically all gaps must be filled. Our outlook will also be bullish only if the XAU/USD price consolidates above $4,140.

Our trading plan is to open long positions, so we should wait for the price to reach the 0/8 Murray level or for the price to break above the downtrend channel. We should monitor both levels for buying opportunities.