XAUUSD In a Channel

After a significant drop, price has entered to the correction phase and is bouncing in the ascending parallel channel.

It may takes a while for price to bounce in the channel (We should wait for the breakout).

Based on the previous sharp downtrend, if the channel’s lower side broken to the downside, we can expect a drop to S1 around 1742 and in the case of a downside breakout on this level, we can assume that the downside move is going to be continued and the next target would be around 1728- 1726 which is a strong support level.

Otherwise, if the channel broken out to the upside, the bearish scenario is going to be expired.