USDX A Crocodile Just About To Strike

1. USDX - A Crocodile Just
About To Strike

2. Points To Be Covered Today:
• Gold Investment Update
• The Seasonal Thesis Remains Intact
• Week Started With A Breakout
• Bearish Price Prediction For Gold
• Gold Technical & Fundamental Overview
• Gold News & Analysis

3. Gold Investment Update
• Taking a sip from a crocodile pond is risky, but some animals try
anyway. And die. Beware, as trying to profit from the PM’s pool now
could end alike.
• Just as ignoring a crocodile hiding in plain sight, ignoring the USD
Index is a dangerous activity.
• And while investors continue to drink from the pond, the greenback’s
nose is literally perched at the water’s surface.
• The USD Index is currently consolidating below the neckline of its
inverse (bullish) head & shoulders pattern, so its wide eyes are also
glaringly visible.
• And with a strike liable to happen at any moment, a leap above 93
could make the USD Index devour gold, silver and mining
stocks.

4. USD Index
• To explain, the USD Index often soars during the
summer months (major USDX rallies often start during
the middle of the year),
• While the greenback’s back-and-forth movement has
uplifted the PMs, once the USDX resumes its likely
uptrend, the former’s optimism could dissipate rather
quickly.
• As a result, if the ambush ushers the USD Index above
93, the next stop is likely 98.

5. $USD US Dollar

6. The Seasonal Thesis Remains Intact
• Furthermore, the seasonal thesis remains intact: I mentioned
above that the USD Index often records material upswings
during the middle of the year.
• And with the hunter’s disguise nearly always catching
overzealous investors by surprise, will the next trap be any
different?
• In fact, the USD index seems to be breaking above the neck
level of its inverse head-and-shoulders formation at the moment
of writing these words.

7. The Seasonal Thesis Remains Intact - I

8. Week Started With A Breakout
• The week started with a breakout, so there’s plenty of time for the markets to
react before the next bigger break takes place (the next weekend). In other
words, this week could be quite volatile and nothing like the previous weeks’
boredom.
• Gold, silver, and mining stocks might slide quite profoundly before we hear
Friday’s closing bell.
• If you analyze the chart below, you can see that summertime surges have been
mainstays on the USD Index’s historical record and double bottoms often signal
the end of major declines or ignite significant rallies.
• For example, in 2004, 2005, 2008, 2011, 2014 and 2018, a retest of the lows (or
close to them) occurred before the USD Index began its upward flights. In
addition, back in 2008, U.S. equities’ plight added even more wind to the USD
Index’s sails.
• And if the general stock market suffers another profound decline (along with gold
miners and silver), a sharp re-rating of the USDX is likely in the cards.

9. $USD US Dollar

10. USDX’s Long-term Breakout Clearly Visible

11. Euro Index’s Recent Symmetrical Decline Mirrors
• As another important variable, the Euro Index’s recent symmetrical decline
mirrors the drawdown that we witnessed in mid-2020.
• And if the Euro Index breaks below the neckline of its bearish head &
shoulders pattern, the steep decline could usher the index back to the
June 2020 lows or even lower.
• For context, the EUR/USD accounts for nearly 58% of the movement of
the USD Index.
• In addition, when the Euro Index reached the neckline of its bearish H&S
pattern in early April 2021, late September 2020, and late October 2020, a
fierce rally ensued.
• However, this time around, the corrective upswing has been extremely
weak. As a result, with lower highs and lower lows plaguing the Euro Index
in recent weeks, it’s likely only a matter of time before the neckline breaks.

12. $ XEU Euro

13. Bearish Price Prediction For Gold
• Even more relevant, the completion of the masterpiece
could have a profound impact on gold, silver and mining
stocks.
• To explain, gold continues to underperform the euro.
• If you analyze the bottom half of the chart above, you can
see that material upswings in the Euro Index have resulted
in diminishing marginal returns for the yellow metal.
• Thus, the relative weakness is an ominous sign. That’s
another point for the bearish price prediction for gold.

14. The Bottom Line
• Once the momentum unfolds, ~94.5 is likely the USD Index’s first stop,
~98 is likely the next stop, and the USDX will likely exceed 100 at some
point over the medium or long term.
• Keep in mind though: we’re not bullish on the greenback because of the
U.S.’ absolute outperformance.
• It’s because the region is fundamentally outperforming the Eurozone,
and the relative performance is what really matters.
• In conclusion, while gold, silver and mining stocks are increasingly
treading water, the USD Index’s jaws are expanding.
• And with the greenback poised to take a bite out of the trio’s performance
over the medium term, the precious metals could be in for a long and
arduous recovery.
• However, after the drama unfolds, gold, silver and mining stocks are
poised to continue their long-term secular uptrends.

15. Gold Technical Overview

16. Gold Technical Overview - I
• Gold price is heading towards minor support around $1802, which is the convergence of the pivot
point one-day S1, Bollinger Band four-hour Lower.
• A sharp drop towards Bollinger Band one-day Middle at $1796 cannot be ruled on a breach of the
latter.
• The sellers will then need to clear a dense cluster of support levels around $1793, where the
SMA100 one-day, pivot point one-day S2 and the previous week’s low meet.
• The intersection of the Fibonacci 23.6% one-month and pivot point one-week S1 at $1790 will test
the bearish commitments.
• Alternatively, recapturing $1809 barrier (Fibonacci 61.8% one-week) is critical to initiate any
meaningful recovery towards powerful resistance at $1814, SMA200 four-hour and Fibonacci 38.2%
one-month coincide.
• Acceptance above the latter will call for a test of the $1819 level, the confluence of the SMA5 one-
day and Fibonacci 38.2% one-week.

17. Gold Fundamental Overview
• Gold price is extending previous losses following the rejection at the critical SMA200 one-day
resistance at $1825.
• The rebound in the US Treasury yields is weighing on the yieldless gold amid risk-on sentiment, as
the European market rises on strong earnings and positive close on Wall Street overnight.
• Meanwhile, broad-based US dollar strength also keeps gold price undermined, with the Delta covid
variant concerns boosting the dollar’s safe-haven appeal.
• The greenback also draws support from the uptick in the yields, as the focus now shifts towards
the US Senate’s early test vote on President Joe Biden’s infrastructure bill.
• Gold’s fate hinges on the outcome of the key vote due later in the day and the dynamics in the yield
and the dollar amid incoming virus updates and earrings reports. For now, the King dollar remains in
a win-win situation, as a drive for safety remains in the backdrop.

18. Gold Fundamental Overview - I

19. Gold News & Analysis
• XAU/USD’s downside remains exposed towards $1790
• Gold price targets levels sub-$1800 as USD remains in a win-win situation.
• US Senate vote on infrastructure bill eyed amid lack of relevant economic
news.
• XAU/USD flirts with weekly lows, around $1,795 region.
• XAU/USD stays defensive above $1,800 as coronavirus sours sentiment.
• Source:
• Gold Forecast, News and Analysis - FXStreet

20. USDX - A Crocodile Just
About To Strike

21. THANKS FOR LISTENING
USDX - A Crocodile Just About To Strike