Gold is trading around $4,036 following a strong technical rebound from the $3,900 range, recouping some of the losses recorded last week. Gold may be reaching overbought levels, so we must remain vigilant.

After finding solid support around the 1/8 Murray level, located at $3,906, we observed a recovery above this zone, reaching the psychological level of $4,000.

Now, gold could face strong resistance at the 2/8 Murray level. If the upward momentum persists, we could expect it to encounter the next resistance around the 200-period exponential moving average (EMA), located at $4,113.

Given that the H4 chart shows gold has decisively broken out of the downtrend channel formed since October 15 and is now consolidating above this zone, gold is likely to rally toward $4,113 in the coming days. Once the Murray 2/8 level is surpassed, the instrument could even reach the Murray 3/8 level around $4,218.

The Eagle indicator is reaching overbought levels. Although it continues to give a bullish signal, we believe that if gold encounters strong resistance around $4,062, this area could be considered an opportunity to open short positions.

On the other hand, if XAU reaches the strong resistance at the 200 EMA, located at $4,113, we could also consider this zone a selling opportunity, since technically, the price could reach a strong overbought condition, and this area could serve as a point for a technical reversal. We could then sell with targets at the psychological level of $4,000.

If gold struggles to reach any of the resistance levels we've identified, falls back below the downtrend channel, and consolidates below $4,000, we could view this scenario as a signal to sell, with targets at the 21 SMA at $3,935.