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How Will Fed Rate Decision Affect New Gold Apex Pattern

By Chris VermeulenCommoditiesAug 30, 2022 11:45AM ET
www.investing.com/analysis/how-will-fed-rate-decision-affect-new-gold-apex-pattern-200629194
How Will Fed Rate Decision Affect New Gold Apex Pattern
By Chris Vermeulen   |  Aug 30, 2022 11:45AM ET
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My research shows a new gold apex pattern is set up for Sept. 11~15. Around Sept. 11 or after, gold will attempt to reach this new apex level near $1,766. This price pattern is important because the Fed rate decision date is Sept. 20~21, and a host of economic data reporting comes out the week before the Fed decision.

My educated guess is gold and silver will begin a volatile breakout move, possibly rolling lower to retest support near $1,672, before attempting to move higher as global fear starts to elevate. I believe the current lower support level is critical to understanding the opportunities in gold. If the $1,672 level is breached to the downside, it means that gold has lost a critical support level and will likely trend lower.

Given the statement by Fed Chairman Jerome Powell last Friday, it seems the Fed will not pivot. It will do what is necessary to tame inflationary trends.

Recently I posted two articles about gold and the Fed that you should review as we move toward the Sept. 11~15 dates.

Weekly Gold Chart

I suspect $1,766, the current apex level, will play a critical role as new support/resistance going forward. The strength of the U.S. dollar should have weakened gold more aggressively, but gold is holding up quite well in the face of an ever-stronger dollar.

Some major event may occur near Sept. 11~15 – just before the Fed rate decision on Sept. 20~21.

Gold Futures Weekly Chart.
Gold Futures Weekly Chart.

Daily Gold Chart

Price apex patterns, like this one in gold, usually resolve with an aggressive volatility event before establishing any new trends. I often term these events a “washout rotation.”

For example, look at the apex of the previous (YELLOW) flag/pennant formation. A price neared the apex, but it stayed low compared with the lower yellow boundary. Then, a price reached the true apex, and a broad 6.5% price rotation took place, eventually settling near $1,780.

What happened next was price settled into a rally phase originating near $1,780 and continuing up to $2,077 – a +17.75% rally

Gold Futures Daily Chart.
Gold Futures Daily Chart.

Concluding Thoughts

I can’t predict the future any better than you can. But I do understand flag/pennant formations. I believe the current pennant formation in gold will resolve to the upside – possibly launching gold into another significant rally phase.

I continue to warn my followers that gold and silver must initiate a new upward price trend to break free of the current downward price trend. Yes, we saw a strong rally attempt in early 2022, but that topped out and slid down over the past 4+ months. Now, as we resolve the current price apex, we’ll need to see a substantial price rally above $1,828 to confirm any potential for a new bullish rally phase in gold.

How Will Fed Rate Decision Affect New Gold Apex Pattern
 

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How Will Fed Rate Decision Affect New Gold Apex Pattern

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Comments (5)
Douglas Mirashu
Trader38 Sep 06, 2022 2:52AM ET
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nice one, even the impossible happen, but with solid knowledge in technical and fundamental analysis you can withstand the market even if it uncertain...
jason xx
jason xx Aug 30, 2022 5:18PM ET
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Powell has no credibility. He also said "soft landing" "75bps not on the table" 75bps "will not be common" "inflation is transitory" " no rate hikes until 2023" blah blah blah 🙄
Tom Scheuermann
Tom Scheuermann Aug 30, 2022 5:18PM ET
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I agree....I'm actually more likely to think that what they tell us is false. to what degree is always the question but when they talk it's because they are giving a message to get a desired outcome, not being factual, and this heavy tightening narrative they have set up seems to be a red herring.
Gerard Cullen
Gerard Cullen Aug 30, 2022 1:57PM ET
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I dont think 1675 is that important, 1590 to 1620 followed by rally to low 3000's.
Dwain Hobbs
Dwain Hobbs Aug 30, 2022 1:57PM ET
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Good grief , thats nearly 7% lower ,, that means silver will get destroyed to the 15s again , its already out of the monthly bolenger band , but thats crazy silver , anything goes
Mike Ga
Mike Ga Aug 30, 2022 1:57PM ET
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I tend to agree Gerard. Ive already got silver pined for 16.50.
Mohd Izhar Muslim
Mohd Izhar Muslim Aug 30, 2022 1:10PM ET
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Thank you for sharing the article 💯
Stop Lost
Stop Lost Aug 30, 2022 12:58PM ET
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Nah, gold usually drops down. Sell it short
 
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