Last week was a smooth week for USD bulls and despite being bombarded by series of weak fundamentals, the greenback bounced back against major currencies except the GBP. Of course we all know the bullish stand that BoE and Carney had especially in matters inflation and their plans to reduce QE. It’s a cue we expect major central banks to borrow in the coming months given the fact that BoC and Fed are on the path of monetary policy normalization. In my view, I expect the USD to continue its bullish run as we gear towards FOMC meeting this Wednesday where even though we won’t expect a rate hike-so far hike is placed at <45% and it won’t change with the looks of things-but rather an announcement of balance sheet reduction. With this, most investors expect Yellen to announce the specifics and the path Feds are taking in matters rate hike. Mention of a probably hike this year will spur USD bulls in action and it will kick start a major USD rally. Already, given technical and fundamental combinations especially in this precious metal, I will look to sell and aim at-least 500 pips in the coming weeks.
Technically, this commodity is on a downtrend when that whole candlestick formed above the upper BB. There is also a stochastics sell signal both in the daily and weekly chart. My recommendation is to short now and place a stop loss above Friday’s highs of $1335/ounce. Ideal take profit will be in the support area at $1200/Ounce which was formed when price was oscillating horizontally for the better part of April-July. However, you can place your first TP at $1250/Ounce which is a minor support.
Trading will be executed as follows:
Stop Loss: Above $1335
Take Profit: $1250, $1200
Have a good trading day.