Early in the American session, Gold (XAU/USD) is trading around 1,975.78, above the 21 SMA within a downtrend channel formed since October 20.
According to the H1 chart, we can see that gold has strong bullish potential but is facing strong resistance. A break and consolidation above 1,978 could accelerate the bullish movement and the instrument could reach 1,985. It could even surpass the high of 1,997 and, finally, reach the psychological level of $2,000.
On the other hand, in case gold faces a strong rejection around 1,978 -1,985, a technical correction is expected towards the support of the daily pivot point located at 1,969 which provides an opportunity to resume buying.
The area of 1,985 is located at the 1st daily resistance (R_1). If gold fails to consolidate above this, it will be seen as an opportunity to sell with targets at 1,976 and 1,969 (pivot point).
If the bearish force prevails and if gold falls below 1,966 and below 7/8 Murray, we could expect a bearish acceleration towards 1,953 even towards the 200 EMA located at 1,948.
