Gold, USD and the Euro: the Signs Ahead / Commodities / Gold & Silver 2019

Brexit has become very likely due to result of the UK vote. But so what (gold- and currency-wise)? The uncertainty dropped significantly, and markets were able to sign a breath of relief (bearish for gold), but on the other hand Brexit itself increases the geopolitical turmoil (bullish for gold). Gold didn’t react decisively in the short run overall, but the European currencies: the euro, and the pound rallied. In the first part of today’s analysis, we’ll focus on what happened in the euro and how the forex situation fits the other gold price predictions.

Let’sstart with the long-term chart featuring gold price in terms of the euro.

Goldin the Eyes of the Europeans

Themost important thing about gold’s performance is it’s 2019 attempt to breakabove the 2011 highs. It succeeded but only for a short while. The breakout wasinvalidated almost instantly as it was clear that gold is not able to withstandthe selling pressure. Invalidations of breakouts tend to be very bearishdevelopments and this time was no exception. And just like that – golddeclined.

It’sbeen a few months since gold topped and gold – looking from the long-termperspective - is now only a little lower. Some may say that it’s a proof thatgold is just correcting after a big rally and that another big upswing is justaround the corner. But that’s not what the chart facts support. The fact isthat gold failed to break above the previous high, which is bearish. Looking atthe short-term performance, it might be both: correction or the early part ofthe decline, but so far nothing happened that would justify the bullishinterpretation.

Inparticular, please note that back in 2012, when gold also tried to break abovethe previous high (and it actually succeeded in terms of the monthly highs),and failed, it also declined at a relatively slow pace initially. That didn’tprevent gold from declining very rapidly in the following months.

Thismeans that if you’re using euro for your day-to-day transactions (for instance,because you live in the Western Europe), then you shouldn’t count on thecontinuation in gold’s rally in the following months. In fact, somethingexactly the opposite could take place.

Ifyou’re using U.S. dollars for your day-to-day purchases, the above is also veryimportant to you. In this case, the above chart implies that the value of goldis likely to decline relative to what the EUR/USDcurrency pair will be doing.

Andthe EUR/USD pair…

TheEuro and the Dollar

TheEuro Index – proxy for the above – is at its medium-term resistance. Being atan important resistance without breaking above it means that the price islikely to move down. That’s how resistances work.

Moreover,please note that the entire September – today decline is one big prolongedshoulder of the bearish head-and-shoulders pattern (the early-2019 rally beingthe head). This means that once the Euro breaks significantly lower (perhapstriggered by one of the marketnews scheduled for this week) – below the previous 2019 lows,it’s likely to fall particularly hard. The size of the decline that follows thebreakdown below the head-and-shoulders pattern is likely to be similar to thesize of the head, which in this case means a move below the 2017 low. Ofcourse, this would have major repercussions for many other markets, includinggold.

Ifthe euro declines that significantly, breaking below its 2017 low, and at thesame time – based on the previous chart – gold declines more than the euro,gold would likely truly plunge in terms of the USD. Of course that’s not theonly factor that points to this outcome, but it’s something that confirms other,even more important factors.

Thefull version of this analysis isn’t just about gold in euro terms though.There, we cover the immediate action in gold, silver and the miners in light ofthe USD Index twists and turns. Plus, we feature a little known sign thatgold’s low volume just flashed, and show you its reliability. And of course,you’ll also find there the key factors at play and the targets of our promisingshort position. We encourage you to join our subscribers and reap the rewards. Subscribetoday!

The above article is asmall sample of what our subscribers enjoy on a daily basis. Check more of ourfree articles on our website, including this one – just drop by and have alook. Weencourage you to sign up for our daily newsletter, too - it's free and if youdon't like it, you can unsubscribe with just 2 clicks. You'll also get 7 daysof free access to our premium daily Gold & Silver Trading Alerts to get ataste of all our care. Signup for the free newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
Tools für EffektivesGold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

SunshineProfits enables anyone to forecast market changes with a level of accuracy thatwas once only available to closed-door institutions. It provides free trialaccess to its best investment tools (including lists of best gold stocks and best silver stocks),proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found aboverepresent analyses and opinions of Przemyslaw Radomski, CFA and SunshineProfits' associates only. As such, it may prove wrong and be a subject tochange without notice. Opinions and analyses were based on data available toauthors of respective essays at the time of writing. Although the informationprovided above is based on careful research and sources that are believed to beaccurate, Przemyslaw Radomski, CFA and his associates do not guarantee theaccuracy or thoroughness of the data or information reported. The opinionspublished above are neither an offer nor a recommendation to purchase or sell anysecurities. Mr. Radomski is not a Registered Securities Advisor. By readingPrzemyslaw Radomski's, CFA reports you fully agree that he will not be heldresponsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Przemyslaw Radomski, CFA, SunshineProfits' employees and affiliates as well as members of their families may havea short or long position in any securities, including those mentioned in any ofthe reports or essays, and may make additional purchases and/or sales of thosesecurities without notice.

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.