Last week finished great for the USD, which in theory should be negative for the commodities. Well, buyers on the Oil market seem not bothered about that at all. The situation changes dramatically when we look on Gold. Precious metals definitely feel the rising demand for the American Dollar. Situation on the XAU/USD is far from being optimistic.
On Gold, we finally got a legitimate trading signal. For the past few weeks, since the 24th of August to be precise, the XAUUSD was locked in a sideways trend. Price formed a pennant (black lines), which dramatically decreased the volatility. Lack of the bullish momentum showed us a weakness in the buyers camp. That resulted with a breakout to the downside, which brought us a technical sell signal. At the end of the week, Gold tried a reversal but that is just a technical pull-back which tests the recent support as a resistance. That is a typical movement, which can serve as an opportunity to jump into the trade for those traders, who missed the initial drop.
Sell signal is on, as long as we stay below the green line. Do not forget that on Gold, we are very close to the long-term up trendline (10 years). Breakout of such an important support can have catastrophic consequences. That is one of the reasons why we had such a strong upswing in the middle of August. Buyers have to defend it at all costs.
