On Thursday, the gold plunged sharply below $1,355 after the release of better than expected Philly Fed manufacturing index. The index soared to 23.2 vs. 20.8 forecast, which is a pretty nice gain. Secondly, the demand for haven assets diminished as global political tensions eased. We haven’t heard any remarks from the USA, China, Russia or Syria, which is actually supporting the greenback.

In the absence of U.S. economic events, the market is more likely to focus on technical indicators. Having said this, I just spotted a really cool setup to trade today. Take a look…

GOLD – XAU/USD – Upward Channel Breakout

On the 4-hour chart, we can see that gold has come out of its upward channel. This bullish channel provided a solid support near $1,346, but the bears have taken it out in the meantime.

Gold – 4 Hour Chart – Technical Setup

At the moment, gold is trading below a support zone which seems to have become a resistance level (at $1,346) and it’s likely to find another support near $1,340. The leading indicators, RSI and stochastics, are massively oversold. It means, sooner or later, the sellers may get exhausted and we may see bulls entering the market.

Gold – XAU/USD – Trading Plan

Fellows, the idea is to keep a closer eye on $1,341 as gold can stay bullish above this level. Whereas, it can target $1,336 on a violation of $1,341. Good luck!