Gold Rebounds As Critical Support Level Holds Off

Key Takeaways

  • Gold rises major pin bar emerges on four-hour timeframe
  • US services PMI is due today

The price of gold extended upside movement on Wednesday, increasing the price of yellow metal to more than $1207 ahead of some key economic releases. The technical bias remains bullish due to a Higher Low and Higher High in the recent upside move.

Technical Analysis

As of this writing, the precious metal is being traded near $1207. A support can be seen around $1200, the psychological number ahead of $1195, the swing low of the bearish pin bar as demonstrated in the following daily chart. A break and daily closing below the trendline support can incite renewed selling pressure, validating a dip below the $1180 support area.

On the upside, the pair is expected to face a hurdle near $1223, the swing high of the last major upside move ahead of $1238, the 38.2% fib level and then $1250, the psychological number. The technical bias will remain bearish as long as the $1188 support area is intact.

ISM Non-Manufecturing PMI

The services sector in the US grew at 56.5 points in February as compared to 56.7 points in the month before, the median projection of different analysts say. Generally speaking, higher services PMI is considered positive for the economy and vice versa thus a worse than expected actual outcome may incite renewed buying interest in the price of Gold.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal near the trendline support appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the trendline as described above.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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