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Confluence of Gold/Silver Price Resistance & USD Support Puts Metals at Risk

Confluence of Gold/Silver Price Resistance & USD Support Puts Metals at Risk

2017-03-28 11:04:00
Paul Robinson, Currency Strategist
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What’s inside:

  • Gold at intersection of resistance
  • Silver at key trend-line, 200-day MA
  • US Dollar Index trades into eyed support, at risk of a bounce

Looking for trading ideas? See our Trading Guides.

On Friday, we continued to take the approach of looking to price behavior in gold and USD for cues on where silver might be headed. To recap: Silver was trading in ‘open space’ (no support or resistance close at hand), while gold was squaring off at trend-line resistance and the US dollar looking headed for lower prices. There was hesitation with gold at resistance, but we gave a slight edge to conviction in seeing a lower US Dollar Index (DXY) to at least keep precious metals buoyed in the near-term. But overall, from a trading perspective we felt the side-lines were the best place to be in the short-run.

Since Friday, DXY has dropped into the support zone we had our eyes on, while gold and silver are both trading up into or very near important resistance levels. The confluence of USD support, precious metals resistance puts us in the neutral to bear-camp over the short-term.

Multiple angles of support are providing DXY with a good backdrop for a bounce. Yesterday’s semi-bullish reversal showed us there are buyers in the vicinity. The index may be on the verge of breaking down from a large ‘head-and-shoulders’ top, but for now it sits on the neckline and is considered support until broken. We’ll update if it breaks, it’s implications for precious metals could obviously be big.

DXY: Daily

Confluence of Gold/Silver Price Resistance & USD Support Puts Metals at Risk

Created with TradingView

Gold traded through one trend-line (August-present) it struggled with just a few days prior, but came very near another trend-line (off the July high). Also, it failed from just above the 200-day MA and below the late February peak. Risk is heightened of a decline from the area between here and 1264.

Gold: Daily

Confluence of Gold/Silver Price Resistance & USD Support Puts Metals at Risk

Created with TradingView

Silver is trading very near the July-present trend-line and right around the 200-day MA. Bearish price action has yet to present itself (i.e. – key reversal bar, engulfing bar, etc.), but the stance is neutral to bearish at this juncture with resistance at hand in both gold and silver, along with support for the US dollar.

Silver: Daily

Confluence of Gold/Silver Price Resistance & USD Support Puts Metals at Risk

Created with TradingView

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

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