French elections have just ended and we are watching the bounce on the Dollar Index, Gold and Silver Trading.
French Elections bounce the markets worldwide. First we will look at the effect on the Dollar index and the Gap down on the open of the markets.
The dollar index gapped down on news of the French elections. Friday’s dollar index closed at 99.67 floating above the professionally traded 200 Moving Average at 98.78. This is a key trading level looked at by most trading professionals across the board. The market moved lower than the 200MA but bounced back in the next few minutes above the 200MA to 98.86. We shall see if this key level holds.
Remember there is always some exhuberance in the markets when there is change in the air and we don’t know how long it will last. It looks to me that the Euro’s bet is that MACRON will win this one as the strength in the EURUSD is revealing.
The next level of major support is under 97 around 96.75 . The key will be in the amount of commitment to keep this direction. This will be breaking below the long term Dollar bull market, and while not invalidating the bull market until we break under 94 area, we could see this consolidate and bounce around here until the election is over. If Macron wins we could see the Euro strengthen, but if Le Pen wins watch out!
French Elections effect on Gold is breaking the inverse relationship gold has held in the dollar and the tie to the USDJPY trade.
Watching as the French Election removes some of the Chaos from our Chaos hedge the international community uses in Gold. It seems this also is revealing a win for Macron. This could be completely wrong, but the look is that Le Pen, which would add a tremendous amount of Chaos to the market is not the favorite as reflected in the Gold price action. Bouncing off the 200 moving average. So now the 200 MA is acting like support.
Will gold break down below the 200 MA? This is a key support area and we will see the price action as sellers either take direction on buyers hold it up and price consolidates along major support. Gold also moved in tandem with the dollar index, so the dollar is weakening and so is gold. Gold has been moving inversely to the dollar index and with the USDJPY trade. Also we can see there is a right hand shoulder in an inverse Head and shoulders pattern. Now this has been invalidated many times in the gold trade as it has been trying to find a bottom.
French Elections effect on Silver trading – small move with no change in the downside move off the new high.
The French election didn’t move the silver market as much as expected as we look at the move on Gold. There was a slight sell off but support was found and moved back up to the open. Silver has been moving down this past week as it hit resistance at 18.60, and sellers moving in at an amazing notational value on April 7, April 18th and April 20. This was in Short Selling. The silver market is highly manipulated and you should be aware of this as it adds volatility and higher risk.
When the French Election was called we saw a sell from 19.96 area to 17.58 before moving to 17.87 slightly higher than the open at 17.83 with buyers in control of this move. The 200MA at 18.08 so we could see this as resistance and just a test of the buyers resolve to break this bearish trend.