Originally Posted on 4/01/2018 @ 3:52 pm
by Steven Warrenfeltz
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I hope that you and your family have a Safe & Happy Easter!
Before we get to this Review & Outlook, below are some of the Best Bullion Market-Related News articles that were taken from this guide's home page, over the last three weeks.
Let's move straight to the charts below because that's where we'll find the answers to the questions in the title.
All the charts on this blog are Daily Charts unless noted otherwise.
Three weeks ago, I wrote the following outlook for the U.S. Dollar and posted the chart below.
The title graphic of this blog post gave away what the new negative patterns are in the U.S. Dollar's Outlook.
Its rarely seen when an asset clears itself of two negative patterns only to find itself in two more, and one of them being a very possible long-term pattern.
The more negative of the two patterns is the 'Descending Channel.'
The identification of a descending channel in any chart isn't good, and the one in the chart below is broad; meaning the dollar could be trading inside it for a while.
The other negative pattern is a 'Rising Wedge,' it's a short-term pattern.
As to when the wedge will be broken is up for grabs, mostly because the market is waiting to see what the Federal Reserve does on March 21st.
The economy is roaring, so I'm expecting a rate hike of 0.25% or 25 basis points, but I doubt it will help the dollar much.
I expect to see the dollar trade up inside the 'Rising Wedge' until the announcement of the rate hike, then after it, the U.S. Dollar will most likely fall below the wedge, confirming it.
That's my expectation, but time will tell and if I'm right, either way, I'll let you know if I am or not.
What happened was pretty close to what was written in the outlook from three weeks ago.
In the 'review' chart below, you can see that after the last blog post was published the dollar did fall a little in price, but then it traded up along the bottom trend-line of the 'rising wedge.'
Then, shortly before the rate hike announcement, the dollar briefly spiked up the price.
But, then after the Federal Reserve announced that it had raised interest rates by .25% or 25 basis points, the U.S. Dollar fell below the wedge confirming it.
So why did it happen?
It's all about the 'mentality of the markets' when traders hear that a
rate hike is coming, they think "It'll make the dollar stronger" so
they buy it and the price of the dollar rises.
But after the rate hike
occurs they start to think about all the different ways higher interest
rates can slow the economy, so they sell the dollar and it falls in
I've watched this happen over and over again ever since Janet Yellen started to raise interest rates in December of 2015.
only reason the dollar didn't climb higher in price before the rate hike announcement this time over
previous Pre-Rate-Hike trades is that the dollar currently has a lot of
negatives looming over it, that it didn't have a few years ago.
Most notably, more government spending with tax cuts, I'm all for tax cuts, but if you don't cut spending, it won't help the dollar. Plus, now we have a possible trade war which only adds to 'uncertainty' in the markets and the dollar hates uncertainty.
In the dollar's outlook chart below, it has created a 'Falling Expanding Wedge.'
The pattern is very broad, and even though the dollar looks like it may break it in a day or two, it could easily trade inside the wedge for a week or more.
The biggest reason why I state this has to deal with all the wavering news reports about a trade war.
If a 'Trade War' does materialize between the U.S. and China, it will hurt the dollar, but the news from last week was optimistic, stating that negotiation were set to begin, which is why the dollar rose in price.
Currently, most of the strength in the dollar hangs in the fate of these negotiations and what we hear in the news about them.
So, we're kind of in 'limbo' right now as to how the dollar will move, however, when the dollar does confirm the positive pattern in the outlook chart below, it will most likely find it very hard to trade above the $90.40 resistance zone.
The 'Descending Channel' was discussed in outlook from three weeks ago here, so until the dollar can muster the strength to break above it, it will pave the way to the dollar's overall direction.
Lastly, the $91.00 price level outlined in the chart below was discussed in detail in the following blog post: The Dollar Breaks a Critical Support Level.
U.S. Dollar's Resistance Levels
U.S. Dollar's Support Levels
Three weeks ago, the chart and commentary below was posted for silver's outlook.
In the chart below, silver has formed a 'Falling Wedge' pattern.
It's a positive pattern and like the pattern from last week, the price of silver could confirm the pattern fairly quickly, this is stated mostly because silver's MACD and RSI (lower indicators) are both indicating that more upward movement could be in its near future.
But price changes can happen on a dime, plus because of the expected FOMC rate hike is in the cards, some selling pressure could be in silver's short-term future.
Time will tell.
In the chart below, you can see that traders sold silver until the Federal Reserve's announcement about interest rates was made.
Then after it was announced that the Federal Reserve increased the federal funds interest rate by .25% the price of silver shot up, confirming the positive 'Falling Wedge' pattern.
In the outlook chart below, silver has formed a negative 'Rising Expanding Wedge.'
The wedge pattern is very broad, and the price of silver could easily confirm it in a day or two.
But, uncertainty is reigning in this market and 'uncertainty' is gold and silver's best friend.
So unless good news comes out of the trade negotiations, we may see silver rise inside this broad negative wedge before it falls below the bottom trend-line of the 'Rising Expanding Wedge' confirming it.
Silver's Resistance Levels
Silver's Support Levels
Below, is what was written three weeks ago in the gold outlook and its corresponding gold chart is below it.
In the outlook chart below, gold has formed a positive 'Falling Wedge' pattern.
Like last week, gold's MACD and RSI continue to show that the price may continue to slowly climb in price.
But, gold is trading in the middle of this wedge and with the FOMC meeting getting closer, gold's movement may become more subdued until after they've announced their decision on rate hikes.
As stated, the pattern is a positive sign for gold, but because of trader uncertainty due to the Fed's up-and-coming decision, we may see more of sideways movement in gold before it confirms the pattern.
In gold's review chart below, the price of gold didn't move down as stated in the outlook from three weeks ago, instead, it mostly moved down, until the Federal Reserve announced that it was going to raise interest rates.
After the rate hike was announced, like silver, the price of gold shot up in price, confirming the positive 'Falling Wedge' pattern.
In the outlook chart below, gold has formed a negative 'Rising Expanding Wedge' pattern.
Like silver, the price of gold could easily break below the bottom trend-line of the wedge this week.
But, because of the uncertainty in the markets about the trade talks, gold could rise in price inside the wedge.
Furthermore, at the end of this week (April 6th) the U.S. Non-Farm Payroll Report will be released, which if it is good, will most likely help gold and silver move higher because it will be a sign that more rate hikes could be in the future.
Because of these factors, we could see gold climb in price before it confirms the 'Rising Expanding Wedge' by falling below its lower trend-line.
Gold's Resistance Levels
Gold's Support Levels
Thank You for Your Time.
Have a Great Week and God Bless,
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