Yesterday's strong sell-off in the dollar was a simple re-pricing due to the Fed once again shifting the inflation goalposts, not a signal of a macro trend shift. As US macro data and inflation data continues to roll in stronger than anticipated, expect the market to get concerned about the Fed being too far behind the ball. Gold should resume its descent amidst that type of macro environment. Right now, gold should still be shorted and the technicals agree.
1270 resistance kept a cap on yesterday/overnight's gains, far below March's prior high at 1284 and prior high resistance at 1276. I would have expected those levels to have been challenged on a genuine shift in sentiment rather than a simple re-pricing. We're also seeing negative divergence forming b/w yesterday's cyclical top and a bearish MACD crossover. I think you can short to 1255 bullish trendline support from early February. From there, price action will dictate the next direction of the next leg.
Keep in mind this is only an hourly chart, so adjust your trade horizon, accordingly.
1270 resistance kept a cap on yesterday/overnight's gains, far below March's prior high at 1284 and prior high resistance at 1276. I would have expected those levels to have been challenged on a genuine shift in sentiment rather than a simple re-pricing. We're also seeing negative divergence forming b/w yesterday's cyclical top and a bearish MACD crossover. I think you can short to 1255 bullish trendline support from early February. From there, price action will dictate the next direction of the next leg.
Keep in mind this is only an hourly chart, so adjust your trade horizon, accordingly.
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So that worked out very nicely with the H&S, too boot! I think you can continue holding your short down to the 1249 consolidation resistance. Remember, you don't need to be a USD bull for the short Gold thesis! The two have a -0.34 correlation since 2013 and believe it or not, in dollar-index terms ($DX_F) Gold's price has been flat since the beginning of February.
