Clash at key levels: Dollar charges, metals at the edge

This is one of those sessions where everything connects.

The dollar is pushing into major resistance just below 100, gold is testing critical support after losing momentum and silver is sitting at the edge of a potential breakdown. What happens at today’s close may define the tone for the rest of the week. 

Let’s break it down. 

Dollar (DX.F)

Let’s start with the Friday’s quote: 

“(…) A potential inverted head & shoulders pattern is emerging. Bullish? Potentially, but without confirmation it means nothing.  

Given the significance of nearby resistance, a close above just the neckline isn’t enough. In our view, only a daily close above 98 could activate the bullish scenario based on this formation. If that happens, the minimum upside target sits near 98.45 - right where the 78.6% Fibonacci retracement aligns. (…)”

From today’s perspective, we see that the bullish formation we mapped out last week finally received confirmation during yesterday’s session. 

Bulls not only closed above the red resistance line, but also reclaimed the previously broken lower boundary of the rising channel, which combined with H4 buy signals gave buyers the momentum they needed to quickly deliver the minimum upside target based on Friday’s formation.

But they didn’t stop there. 

Yesterday’s breakout above the prior key resistance and the closing of the January 23 downside gap was a major technical event and today we’re seeing continuation. 

The Asian session added fuel to the move, launching an attack on the most important resistance before 100 - the zone defined by two bearish daily gaps and the 78.6% Fibonacci retracement. 

This is the battlefield and, in our view, today’s fight around 99.30 will likely determine the direction for the rest of the week. 

If bulls manage to close the day above 99.30 the path toward 100 and the November highs will open (especially since the greenback is already trading above the previously broken red downtrend line). 

If, however, bulls fail to hold these levels, we’ll expect at least a pullback toward today’s gap and the reclaimed red trendline. 

That reaction zone will offer valuable insight.

As always, the daily close above/below key level activates the next very short-term scenario.

Silver (SI.F) 

On H4, we see that yesterday’s consolidation near the 61.8% Fibonacci retracement ended with a bearish victory, showing bulls’ weakness (they didn’t manage to push the price to the next upside target based on the double bottom formation). 

As a result, sellers closed yesterday’s bullish gap, formed a daily bearish engulfing pattern and triggered continuation lower. 

That negative technical combination pushed price below the key support area and into a test of the 8000 barrier and the 50% Fibonacci retracement of the February rebound.

Now things get technical. 

Today’s move has taken silver below the lower boundary of the green rising wedge marked on H4. Therefore, if the daily close confirms this breakdown, bears will gain strong arguments to extend the correction toward 7000-7200 (where the previously broken red resistance line aligns with 78.6% Fibonacci). 

However - and this is crucial - the true key that unlocks deeper downside is not just the wedge breakdown. It is the loss of the green bullish gap from last Monday (8234-8460). 

Therefore, in our view, only a confirmed break below that bullish foothold will give bears open space to press south aggressively.

Today’s takeaway 

This is not a day for emotional positioning. This is a day for structured reaction. 

Dollar: watch 99.30 into the close. If the day finishes above it, we’ll likely see momentum continuation toward 100. However, failure there, will translate into controlled pullback scenario. 

Gold: (…)

Silver: watch daily close relative to the wedge and the 8234-8460 gap. As long as price finishes day above them, in our opinion, there are no aggressive short bias. However, a confirmed breakdown will likely open the way to around 7000–7200 in the coming day(s). 

Final Thought: The dollar is testing strength, metals are testing support and one of them win this round. The close will tell us which side holds control.