Following the protests in the Middle East during the past month, demand for gold as an alternative investment is reaching new highs. As a result, gold climbed from $1,307 an ounce to the $1,410 level in about four weeks. Due to a mild correction, gold is now trading at $1,402 an ounce, however, what seems to be a rounding bottom pattern in the making indicates that gold might cross the $1,410 level shortly.
• The chart below is the spot gold 2-hour chart by ForexYard.
• There is a very distinct bullish channel formed on the chart, which has reached its peak a couple of days ago, at the $1,410 level.
• The Slow Stochastic continues to point up, despite its high location - above the 80-line. This clearly indicates that the bullish momentum has more steam in it.
• The MACD is on the verge of completing a bullish cross. If the bullish cross will indeed take place, this may verify the bullish notion.
• In addition, a rounding bottom pattern appears to be forming on the chart (highlighted in the blue line). This pattern means that gold is likely to climb back towards the $1,410 level.
• The pattern also indicates that gold has potential to cross the $1,410 resistance level, with potential to reach $1,420 an ounce.
• The next resistance levels are located at $1,410, $1,420 and $1,431.
• The next support levels are at: $1,394, $1387 and $1,375.