Bullish USD and Impact on Precious Metals
This Idea is in reference to my previous idea regarding precious metal Gold (see related ideas). It is paramount to monitor the strength of USD in order to gain a better insight of the possibilities of next big move on metals. As far as the strength of USD is concerned, I do not see any valid reason for why it should lose any strength. Here are my reasons and observations:
Technical perspectives:
1- We recently observed a proper bullish engulfing on daily timeframe on index
2- DXY (index) needs to fall lower than 104.4 at least, so that we can move ahead to selling it to the next support level but it did not
3- Lower trendline is still intact on DXY
Macroeconomy:
1- Recent news from The Federal Reserve greatly favor the strength of USD in the international market (Hiking interest rates, NFP, FOMC etc.)
Why should it bother you as a trader?
I have observed that precious metals are one of the favorite instruments for retail traders. As USD gains in the international market, the metals fall! Therefore, it is paramount that you guys understand that USD has no sign of losing strength in the international market so far. Therefore, whatever bullish movements that you are witnessing on metals, and everywhere else against USD, are very likely to be corrections and a trap for the bulls.
Conclusion and suggestion:
Avoid short positions on USD anywhere in the market!!
Technical perspectives:
1- We recently observed a proper bullish engulfing on daily timeframe on index
2- DXY (index) needs to fall lower than 104.4 at least, so that we can move ahead to selling it to the next support level but it did not
3- Lower trendline is still intact on DXY
Macroeconomy:
1- Recent news from The Federal Reserve greatly favor the strength of USD in the international market (Hiking interest rates, NFP, FOMC etc.)
Why should it bother you as a trader?
I have observed that precious metals are one of the favorite instruments for retail traders. As USD gains in the international market, the metals fall! Therefore, it is paramount that you guys understand that USD has no sign of losing strength in the international market so far. Therefore, whatever bullish movements that you are witnessing on metals, and everywhere else against USD, are very likely to be corrections and a trap for the bulls.
Conclusion and suggestion:
Avoid short positions on USD anywhere in the market!!
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