Although its decline was not yet significant, the USD Index finally declined yesterday. Given the recent breakout above the November 2019 highs, this move lower might leave one with mixed feelings.

The USDX in the Short Run

On one hand, the USD Index just closed above the November high for the third consecutive trading day, which confirms the breakout, and is a bullish factor.

On the other hand, the USD Index reversed right at its triangle-vertex-based reversal as we had indicated yesterday. Plus, it did so after a big short-term rally and while being very overbought from the short-term point of view, as confirmed by the RSI indicator. The latter moved above 70, and in the past 1.5 years, this meant a local top in each case.

There are more bearish factors for the short term than the bullish ones, and RSI’s ability to detect short-term tops is uncanny. Consequently, in our view, USD’s outlook for the next several days is bearish.

The USD Index is likely to drop to approximately 98 or even lower, to the rising red support line, and the precious metals market is likely to react by rallying. Since the decline in the USDX is not likely to be very big, this move is not likely to take a lot of time. This means that PMs are likely to rally from here, but not for long.

PMs in the Meantime

Yesterday, gold didn’t report gains despite USD’s decline, but it doesn’t seem meaningful as it was just one day and USD’s decline was relatively small. Miners have barely moved even though gold moved lower, which might be viewed as a bullish sign, but… again – it was just one day of strength and it was not a screaming sign of strength anyway.

Overall, the situation and outlook for the precious metals market seems to be just as it’s been previously. PMs and miners are likely to move higher in the very short term, as the USD Index is likely to decline for the next several days or so. As that’s likely the final part of the rally, silver is likely to outperform, even though it’s not doing so right now.

Thank you for reading the above free analysis. It’s part of today’s extensive Gold & Silver Trading Alert. We encourage you to sign up for our free gold newsletter – as soon as you do, you'll get 7 days of free access to our premium daily Gold & Silver Trading Alerts and you can read the full version of the above analysis right away. Sign up for our free gold newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com
Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.