I have included Target 1 (T1) and Target 2 (T2) levels (or ranges) in this analysis so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level. While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets.
XAGUSD hit my 25.04 target in the FOMC induced rally yesterday. Earlier in the day, the market rallied to 25.00 before profit-taking started. Silver moved down to 24.53 where buying started and after the FOMC a strong rally took the market beyond my 25.04 target. My idea was to buy strength above 24.88 which worked fine but obviously, there was nothing wrong with buying the bounce from 24.53. It was a wild ride. Hope you made some points!
Now silver is trading above the 25.04 level and is bullish above it. I said yesterday: “If the market rallies decisively above the 25.04 resistance, the market could move even higher…” So here we are. Silver has created a double bottom and rallied above the neckline of the formation. Often such strength is accompanied with weakness in equities but not this time. In today’s trading, I’m interested in buying silver above 25.04 if price action confirms the trade ideas. If for instance we get a retracement and a bounce from 25.04 my T1 is at the 25.26 – 25.40 range. The nearest key price levels are at 25.04, 25.40 and 25.45. Alternative scenario: If silver drops fast through the 25.04 support and the bears keep on selling the market there, silver would be likely to trade to the 24.46 – 24.65 range.
USOIL traded to my T1 range (at 97.66 – 98.25) and sold off. I pointed out in yesterday’s analysis that oil was showing some signs of strength after retracing back to 50% Fibonacci level and that a breakout from a bearish channel points to a reversal in the price of oil. This analysis is still valid. Crude is now consolidating above 92.30 and in my mind bullish above this level. My T1 for today’s trading is the 97.40 – 98.30 range and T2 at the 100.80 – 101.30 range. Alternative scenario: Oil breaks the 92.42 support decisively and trades to 87.15.
USNGAS also hit my first target level yesterday in the US session. The high was 4.802 (my T1 range was 4.792 – 4.838) and now the market is once again trading near to the 4.726 key level I wrote about yesterday. I am still interested in long trades in this market. I’m looking for buy opportunities above 4.670 with T1 at 4.802 and T2 at 4.850. Alternative scenario: Market down to the 4.495 – 4.58 range on a break of 4.670 support. However, the idea of buying strength above the 4.670 support stands even if the market first trades below the support level. We’ve seen often that in these volatile markets there are long trade opportunities above key levels even if these levels have been penetrated earlier. Please remember though that we have to always see price action that supports the trade idea in order to justify the trade. Otherwise, we are just gambling and that’s not what successful trading is about.
Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
