Metals and Miners showed signs of topping after Friday’s employment report. Weekly dollar prices spiked down to the 200-week MA and reversed. If the dollar finally bottomed, we should see a 4-8 week recovery. Metals and Miners should soften as the dollar bounces.
The dollar broke key technical support during the 7-Month decline. Consequently, a multi-year bear market has likely begun. After a brief recovery, the dollar should resume the downtrend.
Our forecast calls for a decline in Gold below $1,200 as the dollar recovers. Several cycles converge and support a low in September or early October. If fulfilled, Gold will produce a meaningful bottom and begin the second leg of a multi-year bull market advance.
-US DOLLAR WEEKLY- The Dollar spiked down to touch the 200-week MA and bounced forming a bullish reversal candle. We should finally get a 4-8 week bounce.
-US DOLLAR DAILY- The daily chart formed a large bullish engulfing candle, covering multiple candles. An intermediate-term rally should break the downtrend line and perhaps test the 200-day MA.
-GOLD WEEKLY- Our forecast calls for a drop below $1,200 as the dollar completes an intermediate-term rally. Gold should remain above the December $1,124.30 low. We expect the correction to end in September/October. Once complete, metals and miners will enter the second leg of a multi-year bull market.
-GOLD DAILY- Prices formed a swing high and closed below the 10-day EMA. Steps one and two in building a top are complete. Producing a second red candle close beneath Friday’s close is the third and final step in establishing a top. Once a top is confirmed, we expect prices to descend below $1,200 with a minimum target of $1,188.
-SILVER WEEKLY- A weekly bearish engulfing candle formed. If our analysis concerning gold is correct, silver should test the July $14.34 spike low and perhaps the $13.62 zone before bottoming in September/October.
-SILVER DAILY- Like gold, prices formed a swing high and closed below the 10-day EMA. I’d like to see one more close beneath Friday’s $16.25 close before marking the top officially.
-GDX- Prices broke lower from the consolidation zone, and the descending triangle pattern continues. If gold drops below $1,200 as forecasted, miners should break support at $21.00 and test the $18.58 low before bottoming.
-GDXJ- The major restructuring skewed the junior mining chart. Nevertheless, prices appear to be approaching a significant trendline. If gold drops below $1,200, then GDXJ should test or break the December $27.37 low. The dividend yield of 4.65% is becoming attractive. We could see a dividend yield of 5.5% or more if prices test $27.37.
-DUST- I entered a small position in DUST at $28.96. Stop loss just below $26.66. Prices should reach the upper trendline between $34.50 and $35.00 if GDX retests $21.00. If GDX breaks support at $21.00 and tests $18.58, DUST could see between $44.00 and $45.00.
-JDST- For those that own JDST I’d consider a stop loss just below $58.60. If GDX tests $21.00, JDST should challenge the $79.16 high. GDX breaking below $21.00 and testing the December $18.58 would translate into $100-$110 for JDST.
-DSLV- I entered a small position in DSLV at $27.78 with a stop just below $25.36. If silver descends to the $14.34 spike low and possibly tests the $13.62 bottom, I’ll expect a run to the upper trend channel.
-SPY- Prices are still crawling along the 10-day EMA. These crawl patterns usually end with a sudden/sharp decline. Support is around 245. I still think we will see 250 struck before a larger correction takes hold.
-WTIC- Oil is holding the 10-day EMA, closing below it will fortify a top. If prices don’t breakdown soon, we could see a swift spike to $51.00 before the trend rolls over.
-SCO- I’ll feel more comfortable with the SCO trade if prices rally and close above the 200-day MA ($38.33). Otherwise, we might see a quick drop that better tests the trendline before a tradable rally.
Friday’s price action in metals and miners helped our outlook. However, I’d like to see prices close progressively lower beneath their 10-day EMA’s before approving cycle peaks. I’ll update throughout the week as the structure unfolds.
Have a pleasant weekend.