I hope you are well.
After having two successful GOLD Short trades, here I present the third Short trade on Gold . Do not forget to LIKE it if you enjoyed this analysis.
Also see the two wining Gold short trades in Other Published Ideas.
All right, Let’s start. Since 17 April USD has risen up and just recently there has been a doubt whether this strength would continue or it may simply reverse. I have been waiting for days to answer this question and eventually I think I have the answer. Dollar will rise and trend continuation is our plan.
So why I am going to Short GOLD?
When Dollar appreciates, Gold price goes down and that is why I had two wining trades on Gold since 17 April simply because we have stronger Dollar. Yesterday Trump’s respond to Iran deal also apparently has been good enough to boost Dollar again.
Here are the reasons that I think we can have the third back to back successful trade on GOLD Short.
1) I would start with USD 10 Y BONDS. An opposite direction is expected. To have a good GOLD Short trade we need a stronger USD and to have a stronger USD we have to have a falling US Bonds. Here we are…
See how much downside room it has!
2) TNX is the US Yield and the same direction with USD is expected. See how it bounced off the EMAs and the support. See the weekly first
and now daily
I have the highs of 2016 of 3.04% of interest as the major resistance. TNX touched it but did not break it and bounce. Now it is heading up again and would be interesting to see what is going to happen. Sorry I have to show you another screenshot where you can see what an important year is this year for TNX .
False breakout of the lows (see bold dotted line) plus Inverted and a break of a decades old falling .
3) Next one is Weighted Average USD. This chart has been struggling to break the falling for a few days and just recently it made it or if you doubt about this see the above chart and they have convinced me that this break is legitimate.
4) DXY also delivers the same message and I am less worry about DXY as it can goes a lot higher. The reason for that is that 57% of that is EURO and I am on EURO too. So thanks to EURO for helping us to place this Gold Short trade.
5) US Bond also breaking the first layer of the support. The lower it goes the stronger USD would be.
6) Not to forget that NIKKEI has a direction correlation with USD. It recently made and Inverted and broke the neckline and tested the neckline and now heading higher. Great for USD and GOLD .
7) Last one is weighted average YEN. An opposite relation between USD and YEN is expected. It is interesting that both of them have been rising recently, of course USD was a lot faster. YEN has a lot to fight if it wants to go higher and I am not going to present all the related charts. Just to give you an idea, YEN Yields, Bonds, and NIKKEI are against a rising YEN. Then if YEN is supposed to fall, USD will rise. Do not forget to check out my UJ trade below. I am long from 107 and my target is 112.
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RSI has some upside room before it come to an overbought territory.