Gold and silver have been bullish in 2015 partly because the USD was consolidating. The USD was consolidating because of some unimpressive economic data, but mostly because the market had doubts the FOMC can continue its mid-2015 time-line for a rate hike after so many other central banks became more dovish, cut rates, and announced for stimulus.
Hawkish FOMC: After the FOMC finished its January 27-28 meeting, it stated a positive outlook of the economy in 2015, and said nothing to cause doubt about the mid-2015 rate hike time-line. Thus the USD gained mostly across the board.
Topping, Trendline Breakout: The reaction was not immediately apparent, but by the start of the 1/29 European session, it started to fall faster, and broken below 1270.
The first key support will be around 1255, which is near 38.2% retracement and was a previous resistance pivot. Then the 1235-1240 involves the 50% retracement (1237.80) and a previous resistance pivot as well as the 200-day SMA. The most aggressive bearish outlook at the moment should be limited to the 1220-1225 area, which includes the 61.8% retracement.
Now that there is a price top, watch out for resistance in the 1280-1290 area if there is a pullback.
Topping, Breakout: The 4H silver chart also shows topping and a bearish breakdown of 2015’s rising trendline. To the downside, the 17.00 handle is 50% retracement and might provide some near-term support. There is further downside risk, but we should probably first limit it to the 16.50-16.65 area, which includes a previous support/resistance area, the 200-period SMA in the 4H chart (50-day SMA), and the 61.8% retracement (16.65).
If there is a pullback, we should watch out for resistance around the 18.00 level.
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