USD holds the line, gold on the edge

(www.investorideas.com Newswire) Yesterday, the US dollar defended its key support zone, halting its decline and putting pressure on the metals.

Gold responded with a pullback as it should, but now it’s time for a decision: either the bulls regain momentum or the bears take us down.

The USD index

Yesterday the dollar touched the green support zone and bounced, exactly as we expected. The result? A textbook hammer candle: small body, long tail, indicating a possible near-term turnaround fueled by demand pressure from below.

Sound bullish? At first glance: yes.

But here’s the catch: DX.F still remains below the rising wedge and the key 100.00 mark. Until that ceiling is lifted, this jump can only be a pause and not a pivot.

Zooming in on the microstructure, the dollar just hit the first local resistance created by the previous swing highs and the 38.2% Fibonacci retracement of the recent decline.

In addition, the momentum indicators flash with warning signals:

• CCI approaching overheated area
• The stochastic is already overbought and trending downward
• RSI flirts with resistance around 60

All of the above outlines two short-term possibilities:

• 
  Pullback scenario: A rejection here could send DX.F back to the 99.10–99.20 zone or even around yesterday’s low.
• 
  Breakout test: If buyers push through and the price closes above the red descending channel… things will change.

Key upside levels to watch when bulls penetrate:

• 99.49 -> the 38.2% Fibonacci retracement
• 99.65-99.67 -> the 50% Fibo + the black falling resistance line
• around 99.76 -> highs of November 28 + the bearish engulfing formation
• 99.81-99.86 -> the 61.8% Fibo + highs of November 25/November 26 (+2 bearish engulfing patterns)

Bearish scenario?

• look at 99.30-99.34 –> recent lows +38.2% Fibo (based on recent rise)
• below: 99.23 (50% Fibo), 99.16 (61.8% Fibo), 98.96-99.06 (yesterday’s lows)

My takeaway: the bounce was expected. The rejection? Still on the table. This is a reaction zone and not confirmation of a trend reversal. Let the market show its hand. Today’s close is more important than today’s high.

And now… let’s see how gold (GC.F) reacted.

The gap zone we discussed yesterday completely filled, confirming the shift in very short-term control to sellers and triggering a decline below the next support zone (highlighted in yesterday’s Lab Note #19).

Thanks to this move, today’s session saw a short-lived decline below the 50% retracement of the last swing from 4150, pushing the price towards the next major support zone (4200-4208) and encouraging bulls to enter.

But can they take control?

We are seeing early bullish signals on both the CCI and Stochastics and (as mentioned earlier) the USD has just reached its first intraday resistance. That sets the stage for a potential bullish breakout, but only if buyers can break above the top line of the red falling wedge visible in the first half of the year.

If they canwe will likely see a move to at least 4252.85-4259.70 (today’s opening gap). If the buyers close it, the next target could be around 4281-4284 (78.6% of the last swing + the wedge target area marked in blue).

If they can’t (rejection by the wedge), we will likely see a test of the aforementioned green support zone (4200-4208). However, a potential break below 4200 opens the way to 4172-4182, where the 38.2% retracement of the entire mid-November rally takes place.

Levels to watch:

• Resistors: 4242 / 4255 / 4275–4280
• Supports: 4200 / 4172–4182

My takeaway: the pressure increases. Don’t put this first. Let the wedge (in gold) and the first resistance zone (in the index) decide.

One more point connected. Another trail unfolds. See you on the next chart.

PS Keep that in mind This week only you can unlock full Premium access for just $9 (down from $99) – without obligations. Because the real magic is just beginning: US indices, FX setups, oil and the deeper mechanics.

Click here to unlock Premium for just $9 and I’ll see you in the lab.

Anna

Founder of the trade laboratory

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