Comparison of Dollar Counterparts
Chart courtesy of Tradingview.com
In the above monthly comparison chart, I put in all of the main Dollar rivals and the Dollar index itself, which is shown inverse (100 was divided into DXY). As we can clearly see, all instruments fell dramatically last summer and didn't stop in the autumn of 2014. The black rectangle shows the area where Gold started decoupling with the rest of the Dollar counterparts. It was last September when Gold stopped falling. EURUSD is the most precise copy of the Dollar Index. Crude oil had slightly different behavior last month with less downside momentum. Therefore, all trade setups for more than half a year couldn't be accurate if they were based on pure Dollar dynamics. Gold stalled in the past waiting for a clear and powerful signal to break out of current the sideways action. The main question is, if not the main currency, then what paralyzed Gold? Deflation? It is harmful, not just paralyzing, as Gold is totally unmoved. I hope we will find the answer sooner or later.
Gold
Chart courtesy of Tradingview.com
April was totally frustrating from a Gold trading perspective. As we see in the above monthly chart, last month shaped an already familiar Doji candle. It appears when the open and close price is set almost at the same level with a very thin body of the candle. It shows the market's indecision. In the previous paragraph, I showed you what is puzzling investors. There is no move in the Gold price amid the volatility "festival" in EUR and Oil, where price is falling then correcting and is going to move down again quite soon.
The blue wedge pattern is still in the game as it hasn't been broken yet. Opposite sides became closer at $1100 and $1290, squeezing the market more and more every month, now to the $190 range.
Last month's idea was bullish and a stop was set below $1170, which is luckily safe for now. This trade setup is still valid and targets for gold are $1300/$1434.
The RSI is signaling a bullish divergence with higher lows amid lower lows in the Gold price. The 61.8% Fibonacci retracement kept unsullied as the price the couldn't close below it for more than 2.5 years! All of this adds to last month's bullish idea.
Silver
Chart courtesy of Tradingview.com
Silver is another sad story for traders, but hopefully the dramatic culmination is coming quite soon. April opened at $16.63 and closed down a bit at $16.11. The metal is rangy like Gold, but here we can see a more aggressive and squeezed pattern called the symmetrical triangle (highlighted in blue). It is a tricky model as both sides can be broken, either below $15.80 or above $17. And the market is closer to the upside now.
Once the pattern is broken, we will see a move in that direction. Targets should be set near the first resistance at $18.55 on the upside or close to first support at $14 on the downside.
Stops are safe placed inside of the triangle behind the sides of the pattern.
Major levels are the same, resistance is at $21.50 and major support is at the $9 level.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
