Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

How Will Fed Rate Decision Affect New Gold Apex Pattern

Published 08/30/2022, 11:45 AM
Updated 07/09/2023, 06:31 AM
XAU/USD
-
XAG/USD
-
GC
-
SI
-
DXY
-

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.

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.

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.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.