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(www.investorideas.com
Newswire) The US Dollar is losing momentum fast after failing to
reclaim a key resistance zone, and bears are now pushing for another
leg lower.
At the same time, gold is taking full advantage of that weakness and
just powered through major upside levels. Today is all about watching
whether the dollar keeps bleeding – because as long as it does, metals
stay in the driver’s seat.
USD Index (DX.F): Bears Are Back in Control
Let’s open today’s Lab Note by revisiting the quote from
Jan. 14 (Lab Note #71):
“(…) Friday’s failed move above the upper border
of the mentioned rising channel translated into unsuccessful
breakout above the 61.8% Fibonacci retracement. Additionally, bulls
didn’t manage to close the early-December gap, which together
with the current position of the indictors (Stochastic has already
printed a sell signal, while CCI is deep in overbought territory and
close to rolling over) raises the probability that the
dollar’s next meaningful move will be to the south toward the
downside targets we’ve already discussed on Friday
(…)”
From today’s perspective, we clearly see that the daily chart
shows that despite multiple attempts to break above the resistance
zone we discussed a week ago, bulls failed to close the gap, which
triggered a strong bearish reaction.
Yesterday’s session opened with another large red downside gap,
and when you combine that with fresh sell signals, it basically gave
bears a green light to execute the bearish scenario we outlined on
Jan. 12 (in Lab Note #67):
“(…)
If sellers regain control and close the day under the upper line of
the channel, their first downside target will likely be the
previously broken area around 98.53. A clean break below that level
could expose 98.26, and potentially even a move toward the lower
border of the mentioned channel. (…)”
And as we see, the market delivered: sellers pushed
DX.F straight down into 98.09, printing a daily low
slightly below both of our downside targets during yesterday’s
session.
Even though we saw some rebound later, Wednesday opened with yet
another red downside gap, which, combined with sell
pressure still active, suggests another push lower could be right
around the corner.
First downside target? At least a retest of yesterday’s low.
If bulls don’t step in there, the next bearish destination
becomes the next major support zone based on the October 6, 2025
upside gap (97.41–97.64) + the 61.8% Fibonacci
retracement. At this point, it is worth noting that this important
support zone already stopped sellers twice in December, therefore,
it’s one of those “watch it like a hawk” areas in
the near term.
USD Index (H4): Breakdown Confirmed
Let’s recall one more quote from Jan.14:
“(…) two unsuccessful attempts to go above the channel
adds technical weight and strongly suggests the dollar may retest
the 98.50 support zone in the near term. (…)”
On the H4 chart, we can clearly see that even though bulls managed to
climb above 99, the upper border of the black rising channel + the red
resistance zone was simply too much.
After several days of
consolidation, buyers finally ran out of fuel, and bears stormed the
market.
From this timeframe, we see that the latest decline took the dollar
below the lower boundary of the black rising channel, which means that
until we see an invalidation of this breakdown, any
bounce should be treated as a corrective move inside a broader bearish
swing.
Yes, H4 indicators did flash early buy signals, but as long as those
daily red gaps stay open and DX.F remains below the channel, bears
still have the upper hand.
So… what does this mean for gold?
Last week’s quote turned out to be a good compass for recent
price action:
“(…) As the chart above shows, the U.S. dollar has
been rising since the start of the year, while gold and silver have
not weakened. In fact, the correlation between USD and metals has
increased, not decreased.
How to read this?
(…) That doesn’t mean the relationship is broken
forever. It means that for now, metals are not reacting negatively
to a stronger dollar. Therefore, in my opinion, gold and silver
should be analyzed on their own charts now, however, the USD-metals
relationship should be monitored, not assumed.
(…) Stay patient: if the dollar rolls over, metals may get
an extra tailwind.
The above chart basically proves why it was worth watching…
because the earlier “weird” correlation phase is faded and
we’re now sliding back into the classic relationship again.
In simple terms:
a weaker dollar is back to acting like fuel for metals, and it’s giving bulls exactly what they need to keep pushing
higher.
Nevertheless, keep tracking that correlation because as long as it
doesn’t flip again like it did in recent weeks, dollar weakness
remains a supportive backdrop for gold and silver.
Gold (GC.F) : Bulls Didn’t Just Break
Resistance…
In yesterday’s Lab Note, we wrote the following:
“(…) What’s next?
On the H4 indicators, we can already spot early bearish
divergences, but what’s most important, there are no sell
signals yet. That keeps the door open for further upside.
The next logical target sits around 4768-4780, where price may run
into resistance cluster created by the upper border of the purple
rising channel and the 161.8% Fibonacci extension (marked by the red
ellipse on the H4 chart).
A clean break above that zone could put 4800 firmly back on the
radar.
Looking at gold now, we see that bulls didn’t just clear the
resistance zone we discussed… they also pushed cleanly above
4800, which unlocked even more upside momentum (congrats to everyone who followed yesterday’s scenario – you
either booked another win or added even more profit on top of an
already strong move).
Where can bulls go next? →
The full gold breakdown (scenarios + key levels + targets +
invalidation rules) is available inPremium Lab Notes. If you don’t want to watch the next move from the sidelines
and you’d rather have the planbeforethe market delivers it – the Premium version is where that
happens.
Premium Access:
Anna’s Trading Lab
Lab Takeaway
Today’s play is simple: DX.F is the trigger and gold is the
reaction. As long as the dollar stays below its broken channel and
keeps above mentioned red gaps open, metals can stay bid, but once the
greenback starts reclaiming key levels, gold’s rally can cool
off fast. (…)
Stay patient, respect the levels, and let the market show its hand.
Anna
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