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After we highlighted $1200 as a pivotal level for gold, the shiny yellow metal has bounced above this key level to show bulls still appear intent on carving out a bottom on gold.

As it turns out, the actual low on the daily chart was 1196.39, although price action remained above 1200 for November’s low on a closing basis. A bullish pinbar formed to provide a swing low with a morning star reversal pattern and the 20-day average is providing dynamic support. The bullish channel remains intact and, if the trend holds, gold could make its way towards the 1265.96 high.

 

Whilst not as prominent as the morning star reversal, a hammer low at 1218.11 is a level worthy of monitoring. If momentum turns and price forms a lower high beneath 1243.49, then the ‘bullishness’ of the channel would come into question. However, whilst 1218.11 holds then bullish setups could be considered for a run towards the pinbar high at 1243.49, which is likely to act as interim resistance.

Matthew Simpson CFTe,Senior Market Analyst (Asia)