Strong USD sinks key commodities


The broader bid in the U.S. dollar as markets factor in a more hawkish Fed chairperson and with the Fed on track to hike the Fed funds rate by 25 bp in December has all weighed on commodities this week. Gold broke below the key $1275 and ounce yesterday with s strong move to $1267 this morning. Silver and Copper too dipped to the down side and look vulnerable.

XAGUSD closed yesterday below the 20 DMA and the more significant 200 DMA for the fifth straight session. A short position was entered at 16.77 with a target below the October low at 16.49, a little over the 14 DATR. RSI is 41 and falling and the Parabolic SAR remains negative, target 2 is the lower Bollinger band and latest Fractal low at 16.32.  A break of the 200 DMA at 17.17 will negate this move.  The H4 chart has resistance at 17.07 and is also weak with RSI at 31, a break of a recent Fractal low at our entry 16.77 and the Parabolic SAR turned negative too.

The more volatile Copper chart is also a short position from yesterday.  Entry was taken at 3.1745 with an initial target at 3.1092 – the 14 DATR and the 20 DMA.  The RSI dipped yesterday below  60 and the Parabolic SAR also reversed yesterday. The H4 chart has a negative Parabolic SAR , broke down through the 20 period MA yesterday and created a new Fractal low, which has been broken this morning. A reverse over the recent high at 3.2500 will negate this move.


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Stuart Cowell

Senior Market Analyst


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