The Subtle Precious Metals Signals Keep Coming In / Commodities / Gold & Silver 2020

The greenback exerts powerful influence on theprecious metals – that has been the case yesterday, and it unsurprisinglycontinues to be so also today. So, what message is the USDX sending out rightnow?

USD Index in the Spotlight

We’ll open up with a quote from yesterday’sAlert (by the way, please remember that all charts areexpandable/clickable):

Looking at the 4-hour candlestickchart, we see that the USD Index just formed a reversal and is now testing theprevious lows. There were very few 4-hour reversals in the recent days, butwhen we saw them, big and fast rallies followed. The early-March bottom isparticularly similar to the current situation as the USD Index is – just likeback then – after a visible decline, and the 4h reversal was followed by are-test of the intraday low.

 Whathappened next?

TheUSD Index moved below the intraday low of the reversal and then soared back up– exactly as it did in early March. And just like what it did back then, theUSDX rallied immediately after the bottom and it did so in a sharp manner,especially right after breaking above the most short-term declining resistanceline.

Atthe same time, the USD Index invalidated the small breakdown below the April 1stlow.

Oncethe USD Index soars above the upper declining resistance line (currently atabout 99.6) it will be relatively clear that the short-term bottom is alreadyin and another big upswing has just begun.

Thatline will be the final short-term confirmation, though. The most important lineis the one that the USX is testing right now. It’s the one based on the April 6thand April 8th tops. Once the USDX breaks above it, the short-term oddswill be on the bulls’ side and it will be clearly visible for many traders, notonly for those who pay attention to the price pattern analogies and are able todetect the bottoms earlier (such as us). It could be the case that when youread this, the breakout above this line is already confirmed.

And what happened in the following hours?

The USD Index has indeed broken above all decliningresistance lines. And it gets better – the USDX didn’t just break below thoselines. It then pulled back, verified the previous resistance lines as supportand then moved higher once again. That’s the perfect breakout,which makes the outlook clearly bullish, and very similar to what happenedaround March 10.

The back and forth movement that we’ve seen in thelast several hours – below the previous highs, but also above the recent lows –makes today similar to what we saw on March 12th – right before thepowerful run-up. After we created the above chart, the USDX moved above 100once again, which seems to be confirming the similarity. Still, we wouldn’trule out another final short-term pullback before the true rally is seen. Inpractice, it means that we might see the big run-up today – but even if wewon’t see it today, we’ll very likely see it (probably early) next week.

The implications for the preciousmetals market are very bearish.

Silver Breaks Down

Silver just broke below the rising support line,and has been verifying this breakdown for the past few hours. That’s perfectlynormal and it doesn’t make the situation bullish. Conversely, each passing hourwithout invalidation of the breakdown is another point for the bears. Back inMarch, similar consolidation after the breakdown was the final pause before thebig declines.

Is the history repeating itself here? This seemsquite likely, especially given that the similarity that we’re describing, tookplace on March 12 – exactly the same day when the USD Index was performingsimilarly to its today’s performance. History repeating itself to aconsiderable degree is one of the foundations of the technicalanalysis, and the key factor behind key preciousmetals trading tips.

Moreover, let’s keep in mind that silver is alreadyafter a confirmed breakdown below the rising support line. The implications arestrongly bearish.

Thank you for reading today’s free analysis. Its full version includes details ofour currently open position as well as targets of the upcoming sizable moves ingold, silver and the miners. We encourage you to sign up for our free goldnewsletter – as soon as you do, you'll get 7 days of free access to our premiumdaily Gold & Silver Trading Alerts and you can read the full version of theabove analysis right away. Sign up for our free gold newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
Tools für EffektivesGold- und Silber-Investment - SunshineProfits.DE

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Disclaimer

All essays, research and information found aboverepresent analyses and opinions of Przemyslaw Radomski, CFA and SunshineProfits' associates only. As such, it may prove wrong and be a subject tochange without notice. Opinions and analyses were based on data available toauthors of respective essays at the time of writing. Although the informationprovided above is based on careful research and sources that are believed to beaccurate, Przemyslaw Radomski, CFA and his associates do not guarantee theaccuracy or thoroughness of the data or information reported. The opinionspublished above are neither an offer nor a recommendation to purchase or sell anysecurities. Mr. Radomski is not a Registered Securities Advisor. By readingPrzemyslaw Radomski's, CFA reports you fully agree that he will not be heldresponsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Przemyslaw Radomski, CFA, SunshineProfits' employees and affiliates as well as members of their families may havea short or long position in any securities, including those mentioned in any ofthe reports or essays, and may make additional purchases and/or sales of thosesecurities without notice.

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