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April 17, 2020 | The Subtle PMs Signals Keep Coming In

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same. His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation. Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions. High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital. PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential. As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

The greenback exerts powerful influence on the precious metals – that has been the case yesterday, and it unsurprisingly continues to be so also today. So, what message is the USDX sending out right now?

USD Index in the Spotlight

We’ll open up with a quote from yesterday’s Alert (by the way, please remember that all charts are expandable/clickable):

Looking at the 4-hour candlestick chart, we see that the USD Index just formed a reversal and is now testing the previous lows. There were very few 4-hour reversals in the recent days, but when we saw them, big and fast rallies followed. The early-March bottom is particularly similar to the current situation as the USD Index is – just like back then – after a visible decline, and the 4h reversal was followed by a re-test of the intraday low.

What happened next?

The USD Index moved below the intraday low of the reversal and then soared back up – exactly as it did in early March. And just like what it did back then, the USDX rallied immediately after the bottom and it did so in a sharp manner, especially right after breaking above the most short-term declining resistance line.

At the same time, the USD Index invalidated the small breakdown below the April 1st low.

Once the USD Index soars above the upper declining resistance line (currently at about 99.6) it will be relatively clear that the short-term bottom is already in and another big upswing has just begun.

That line will be the final short-term confirmation, though. The most important line is the one that the USX is testing right now. It’s the one based on the April 6th and April 8th tops. Once the USDX breaks above it, the short-term odds will be on the bulls’ side and it will be clearly visible for many traders, not only for those who pay attention to the price pattern analogies and are able to detect the bottoms earlier (such as us). It could be the case that when you read this, the breakout above this line is already confirmed.

And what happened in the following hours?

The USD Index has indeed broken above all declining resistance lines. And it gets better – the USDX didn’t just break below those lines. It then pulled back, verified the previous resistance lines as support and then moved higher once again. That’s the perfect breakout, which makes the outlook clearly bullish, and very similar to what happened around March 10.

The back and forth movement that we’ve seen in the last several hours – below the previous highs, but also above the recent lows – makes today similar to what we saw on March 12th – right before the powerful run-up. After we created the above chart, the USDX moved above 100 once again, which seems to be confirming the similarity. Still, we wouldn’t rule out another final short-term pullback before the true rally is seen. In practice, it means that we might see the big run-up today – but even if we won’t see it today, we’ll very likely see it (probably early) next week.

The implications for the precious metals market are very bearish.

Silver Breaks Down

Silver just broke below the rising support line, and has been verifying this breakdown for the past few hours. That’s perfectly normal and it doesn’t make the situation bullish. Conversely, each passing hour without invalidation of the breakdown is another point for the bears. Back in March, similar consolidation after the breakdown was the final pause before the big declines.

Is the history repeating itself here? This seems quite likely, especially given that the similarity that we’re describing, took place on March 12 – exactly the same day when the USD Index was performing similarly to its today’s performance. History repeating itself to a considerable degree is one of the foundations of the technical analysis, and the key factor behind key precious metals trading tips.

Moreover, let’s keep in mind that silver is already after a confirmed breakdown below the rising support line. The implications are strongly bearish.

Thank you for reading today’s free analysis. Its full version includes details of our currently open position as well as targets of the upcoming sizable moves in gold, silver and the miners. We encourage you to sign up for our free gold newsletter – as soon as you do, you’ll get 7 days of free access to our premium daily Gold & Silver Trading Alerts and you can read the full version of the above analysis right away. Sign up for our free gold newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits – Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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April 17th, 2020

Posted In: Sunshine Profits

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