It’s been a week of rising tension between the greenback and precious metals.
With the dollar index (DX.F) attempting a bullish breakout and silver consolidating just below key resistance, we’re entering a zone where “confirmation” will separate fakeouts from trend continuation.
USD Index (DX.F) - H1: Breakout, But Into Trouble?
Bulls managed to break above the red declining channel and pushed through the orange resistance zone created by recent local highs and… that’s already a big win.
That breakout opened the door to the next very important resistance area formed by the red resistance line (based on previous highs), the 61.8% Fibonacci retracement of the last week’s drop, and a major bearish gap (clearly visible on D1 below).
This is a classic “test of conviction” moment. A clean close above that red gap zone would unlock targets around 99.40-99.50, which aligns with the 50% of the entire November - December downward move and last week’s highs. In this area, the size of the move would also correspond to the height of the very short-term channel (marked on H1).
Nevertheless, the hourly indicators are heavily overbought. If bulls hesitate here, we could see a reversal and a classic retest of the previously broken upper line of the red channel (currently at around 98.98).
My takeaway: today’s key message - watch the reaction near the red gap/resistance zone like a hawk. If we break and hold above, an intraday bullish continuation is likely. What if rejection happens here? That will likely open the door for a retest of the orange zone around 98.95-99.03. This is the type of Monday that could set the tone for the entire next week.
And what’s happening with silver?
Silver (SI.F) - D1: Bulls Hit a Wall Around 6000 (Again)
Friday’s candle made a new high… but failed to close above the psychological barrier of 6000. More importantly, the red bearish gap still remains open, and the day closed inside the orange consolidation. No breakout. No confirmation. Yet.
So, what does that mean?
- The green gap zone and the upper purple trendline offered solid support and bears were rejected there
- The red zone above remains the final roadblock before bulls can push through 6000
- Only a confirmed upside breakout from the orange consolidation could unlock a measured move to around 6200 (equal to the height of the current range → we wrote more about these key levels in our Lab Note #29)
Silver (SI.F) - H4: Still Inside the Range
Despite today’s dollar’s jump, silver hasn’t really flinched. It’s now clearly stuck inside another orange consolidation, which means that:
- the breakout to the upside = attempt to finally crack 6000
- the breakdown = test of the last week’s lows + critical green support from D1
My takeaway: today’s setup is binary and there’s no need to predict. Let price action lead. A confirmed breakout will give you a clear upside play. Breakdown = watch for a reaction around the 5640-5700 zone.
Having said that, let’s check what happened at the same time with the yellow metal.
Gold (GC.F) - H4: Bearish Pattern Emerges
On Friday, gold bulls failed around the 4300 level, and price dropped back inside the triangle, which translated into a bearish engulfing pattern (marked with red). Typically, this setup indicates a shift in momentum, and when it is confirmed by a close below support, it often leads to short-term pullbacks.
Therefore, if bears manage to push the daily close below the lower line of the triangle, we’ll likely headed for a test of the 38.2% Fibonacci retracement of the Nov.18-Dec. 1st rally and the green support zone: 4172-4182 in the coming day(s).
My takeaway: key level to watch today = triangle support zone. If we close below - expect a deeper correction. Otherwise, it's just noise within structure.
Final Summary (What to do today?)
- USD Index: critical moment - bulls need to prove themselves. If they break and hold above the red gap zone, momentum could carry through to next session(s). Otherwise… watch for a pullback and verification of earlier breakout(s).
- Silver: dead-center in a high-stakes range. Act only on breakout or breakdown. Targets are clean on both sides.
- Gold: triangle breakdown is the signal to look for.
- Friday rules apply: if the signal isn’t clear, don’t force it.
Stay sharp, stay tactical. See you on the next chart.
Anna
Trading Lab Founder