Originally published Mar. 31, 2023 by TraderStef on CrushTheStreet (updated)
The Fed’s March 22 FOMC monetary policy decision hiked interest rates another .25 basis points to save face with its inflation battle, amid a sudden and ongoing banking crisis (Part 1 Twitter thread, and 2 ‘s thread) as a de-dollarization (thread) of the dollar’s global currency reserve status accelerates. Gold and silver spiked on the Silicon Valley Bank (SVB) and Signature Bank bailout implosion in early March, then a bailout and partial bail-in of Credit Suisse with a shotgun wedding forced upon UBS. This week, Yellen expressed concern about “shadow banks” that include things like hedge funds and money market funds. The #TaperCaper taking hold has put downward pressure on the dollar that provided gold and silver plenty of room to rally throughout March. In the meantime, retail stackers continue stuffing their safes with gold and silver coin, paper traders are piling into options because they “see scope for further gains as banking turmoil boosts metal’s safe haven appeal,” and central banks are still purchasing record amounts of bullion. Despite the collective West’s economic sanctions imposed on Russia due to NATO’s proxy war (Part XIII and thread) in Ukraine, Putin added 1 million ounces (31 tons) of gold to Russia’s sovereign stash of pet rocks.
Putin’s Ice Cream Moment During a Farm-Agriculture Inspection – RT
Let’s move on to a technical analysis of the weekly charts for gold and silver. Be mindful that a window of opportunity for swing or scalp trading paper ETFs, mining stocks, or futures contracts does not necessarily equate to timing for buying physical bullion or coins, and a weekly chart focuses on the potential price movement for a few weeks. To view a larger version of any chart below, mouse over it to select or right-click and choose a view image option. Here’s an excerpt from the Mar. 1 analyses (thread):
“An early February FOMC monetary policy announcement and Fedspeak moments following the press conference resulted in a dollar rally ($DXY) that put downward pressure on the precious metals throughout February… We’re in a ‘back up the truck’ (#BUTT) environment for coins from a fundamental point of view and premiums have returned to a reasonable price point.” – TraderStef
Seasonality for gold and silver futures as of Mar. 31, 2023…
I’m including the 4-hour gold and silver charts today with a dollar ($DXY) overlay for a slice and dice visual of the rally since SVB imploded in early March. They show details of the last leg of an Ascending Scallop pattern that’s drawn and annotated on both weekly charts. Today’s written commentary will only cover the weekly candlestick charts.
Gold Spot 4-hour chart as of Mar. 31, 2023 close…
Gold Spot weekly chart as of Mar. 31, 2023 close…
Excerpt from Jan. 14, 2023 weekly (thread) gold chart analysis:
“The pet rock has had a solid $300 rally after the pivot off a Triple Bottom consolidation above $1,611 lateral support. It decisively breached the Down Channel’s topside trendline and moved through all the moving averages in November, took a breather during December at around $1,800, held above the 50 Exponential Moving Average (EMA), and tapped the 23.6% Fibonacci at $1,832. The price action thus far in January has tapped $1,920 (2011 high) within a tight Up Channel and might have the momentum to challenge the Aug. 2020 and Mar. 2022 all-time highs at $2,075. There were numerous opportunities in the fall to layer in core paper positions at lower price points or scalp trade the intraday price action…The chart remains bullish with the next resistance at $1,980, and be cautious of volatility while scalping intraday trades. Support is wherever the 50 EMA is trending.”
Excerpt from Mar. 1, 2023 weekly (thread) gold chart analysis:
“A Broadening Right-Angled Descending Formation pattern has developed since the 2020 high and subsequent price chop… Upward breakouts from that type of pattern occur roughly 64% of the time. Gold rallied a remarkable $345 within an Up Channel after the pivot off a Triple Bottom consolidation above $1,611 lateral support, where a rare and bullish 3-Step Swiss Stair appeared on the daily chart noted in the Jan. 14 analysis. The price action tapped a $1,960 high on Feb. 1, then the FOMC rate hike and fedspeak sparked a rally in the dollar that launched a healthy pullback before $1,980 could be challenged. There was Spinning Top and a Rickshaw Man (aka Doji candlesticks) close in the preceding two weeks, which were a heads up that a correction in the near-term was possible. The price action so far this week is pivoting off 50 EMA support well above the 23.6% Fibonacci level of $1,788. Gold printed a low of $1,805 during the London open on Feb. 28 and is trading at $1,840 late this morning… The chart is neutral until $1,980 is taken out with conviction. Remain cautious of geopolitical and economic news-driven volatility while scalping intraday trades. Support is currently at the 50 EMA level and some price consolidation is likely before the next FOMC announcement on Mar. 22 that includes a summary of economic projections.”
There were two weeks of consolidation above $1,810 before a pivot off the 50 EMA found its legs and the price action closed above the 21 EMA and 10 EMA. A subsequent thrust to the upside occurred when SVB news hit the headlines and never looked back, which resulted in a $200 rally that printed a $2,010 high during the afternoon of Mar. 20 at the recent high of the Ascending Scallop. Another consolidation is taking place at the $1,980 resistance/support lateral and the price action closed at $1,970 today. The take out of $1,980 was not decisive and short-lived following a powerful rally that’s in overbought territory and requires a breather. The all-time high at $2,070 to $2,077 is the next major resistance level. Seasonality dictates that further gains are possible before the price action consolidates through mid-spring into early summer.
The DMI-ADX is nearing a bullish Alligator Tongue power trend setup, StochRSI is in overbought territory, Momentum, Money Flow, and the Commodity Channel Index (CCI) rolled over from their peak and were flat this week, the buy Volume has fallen over the last two weeks after printing the $2,010 high, and all of the moving averages remain lined up nicely. Given the precarious geopolitical situation, domestic issues, de-dollarization, and a banking crisis that’s likely to worsen, I don’t recommend trading gold this spring based on usual seasonality patterns. Keep a close eye on the news and chart volatility. There’s potential for gold to embark upon a powerful secular bull run when $2,077 is left in the dust. The chart is bullish, but I remain neutral until the current consolidation finds a direction through spring.
Silver Spot 4-hour chart as of Mar. 31, 2023 close…
Silver Spot weekly chart as of Mar. 31, 2023 close…
Excerpt from Jan. 14, 2023 weekly silver chart analysis:
“The price action in silver printed a high of $24.54 last week and continues to consolidate at around $24 within a tight Up Channel with bouts of intraday volatility. The topside trendline of a Descending Broadening Wedge drawn back to Jan. 2021 is a significant resistance level to breakout from, and must be done with conviction if $29 and $30 are to be challenged in the near-term. This week’s close is indicative of additional upside after a consolidation… The silver chart is bullish but be cautious of continued volatility while scalping intraday trades. The next resistance is at $25.70 to $27.50, and support is wherever the 50 EMA is trending.”
Excerpt from Mar. 1, 2023 weekly silver chart analysis:
“Silver spot printed a high of $24.62 going into the February FOMC monetary policy announcement and rolled over into a correction with gold as the dollar rallied, and closed that week with a long-wicked Marubozu Candle (aka Plunger Candle). The subsequent price action violated all the EMAs and found support at the 200 EMA, the confluence of two Fibonacci levels, and an overhead trendline drawn back to Mar. 2022 when it closed last week at $20.72. So far this week, silver printed a high of $21.16 today chopping around $21 as I type. All other studies are nearly identical to the gold chart. Silver is neutral until the overhead 50 EMA is taken out again and the Descending Broadening Wedge’s topside trendline is decisively breached. Remain cautious of geopolitical and economic news-driven volatility while scalping intraday trades.”
Following two weeks of consolidation below the 200 EMA, silver blasted through the 50 EMA without hesitation on the SVB implosion. The rally has not had a breather on the weekly chart, but has hit a $24.15 brick wall today at the Descending Broadening Wedge’s topside trendline, just above the 50% Fibonacci, and lateral resistance due to the choppy price action from Dec. 2022 and Jan. 2023. The next resistance level is $25.70 to $26.
The DMI-ADX is positive but has not completed a power trend setup, StochRSI is not overbought and has room to run, Momentum, Money Flow, and the Commodity Channel Index (CCI) rolled over after peaking last month and turned upwards during the March rally, but buy Volume has fallen during the rally and is unremarkable. Seasonality dictates a pullback beginning in mid-April until early summer, and reasons to be Johnny-on-the-spot if trading are the same provided in the gold analysis. There could be a powerful rally if silver leaves the Descending Broadening Wedge’s topside trendline in the dust. The chart is bullish for early April, but neutral into mid-spring unless SHTF and the price action rallies with gold.
The Fed Flunked Its Own Stress Test – Peter Schiff, Mar. 29
Bigger Financial Crisis Than GFC – Bank Bailouts Will Devalue the Dollar – Peter Schiff, Mar. 27
Plan Your Trade, Trade Your Plan
Headline Collage Art by TraderStef
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