March 20th Morning Brief – 4 Things to Watch for Today
Dave Green • 2 min read
Welcome back, traders. I hope you had a great weekend. I had a very exciting weekend as I traveled to Malaysia. It is such an amazing country, with friendly people and beautiful places to visit. Well enough about my trip, let's take a look at the trade opportunities in the Bullion market.
A Quick Recap
Over the previous week, we encountered some major changes in the technical outlook of the market. Most of these changes were caused by U.S economic events. Let's have a quick look:
FED Rate Hike & Janet Yellen
On Wednesday, the Federal Reserve hiked the rate by 25 basis points to 1%, but the greenback failed to find the nescessary support. As we discussed in my previous report, March 16th Morning Brief – Why Did The U.S Dollar Fall On The Rate Hike?, most of the reversal was caused by the unchanged outlook of the rate hike in 2017. Hence, the unsurprised investors switched hands with the Bullion market.
U.S Dollar Index – Five Week Low
The U.S dollar index, a measure of the greenback's strength against major currencies, fell below 100 levels due to the dovish monetary policy from the Federal Reserve. EUR/USD rose more than 170 pips and the GBP/USD soared around 260 pips.
Bullish WTI – Crude Oil & Inventories
The poor crude oil finally got some support after the oil inventories fell for the first time in nine weeks. Oil prices pulled back by 2% to a high of $49.58.
4 Major Events to Watch for Today
CAD – Wholesale Sales m/m (13:30)
EUR – German Buba President Weidmann Speaks (17:45)
USD – FOMC Member Evans Speaks (18:10)
GBP – MPC Member Haldane Speaks (19:20)
Gold, the Safe Haven Asset
Gold is a center of focus these days because of increased haven appeal after the FOMC, Fed rate hike and the weaker dollar. It jumped to $1,234 after adding 370 pips from last Wednesday.
Gold – the 4- Hour Chart
For now, the Gold is still bullish at $1,234, but it's in between trading levels. We can see in the 4-hour timeframe, it has completed a 50% Fibonacci retracement $1,229 and is heading toward 61.8% of $1,237. The RSI, at 79 (overbought), is suggesting that buying now may not be a very good idea. We may have a winning position, but this requires us to place a huge stop loss.
At this moment, I will wait for the market to test $1,236- 37 area before posting a fresh Gold Signal. Keep following, we may have a trade in the European session.
Silver, the Gold Correlated Metal
I'm unsure why, but Silver seems to be having a bit of lag in following the Gold's rise. Today, in the Asian session, the Gold has violated its previous high's but Silver is not following suit. It's still shy, staying at $17.433, below a previous high of $17.540.
Silver- 1- Hours Outlook
At present, I can see major resistance at $17.440 and again at $17.512. However, $17.512 is the level where the silver forms the ascending triangle pattern in the 1-hour chart. Besides that, the RSI is overbought (at 71.17) and the 50 periods EMA is suggesting a bullish tone.
Just like the Gold, the Silver is not giving any clear cut ideas for a trading signal. I would recommend to take up a buying position only above $17.45, with a stop-loss below $17.400 and a take profit at $17.50.