Buyers came to rescue as the Dollar breached the June/July support line. This corresponded with gold attacking key resistance at $1220. The Dollar reversed, and Gold rolled over.
Technically speaking, the dollar hasn’t declined far enough to support a cycle low. Today’s reversal was likely trend chasers buying support expecting a turnaround. I’m hesitant to believe the cycle bottomed without closing decisively below the June/July support line. If this is just a short-lived bounce, then prices should rollover in a day or two.
Miners completed their bearish engulfing candles. Downside follow-through tomorrow or Thursday will validate today’s reversals. Today’s price action will give the bears the confidence they need to add new shorts. Failing to follow-through and invalidating today’s reversals could establish a psychological turning point. Overcommitted bears will have to cover if miners reverse and turn higher. Consequently, the price action over the next 24/72 hours is crucial.
I still think meaningful bottoms are possible. Gold needs to hold the $1198 – $1200 level in the coming days to support another raid on $1220. Declining below $1198 and closing below $1189.50 would nullify the young uptrend.
Let’s see how miners react tomorrow. If they stabilize and resist the bearish forces, I’ll remove my hedges. If they don’t, then I think we need to be prepared for more downside.
-US DOLLAR- An A = C correction implies a cycle decline to the 93.50 area or lower. Below the 93.00 level and price will likely test the 200-day MA before bottoming. If the Dollar bottomed prematurely, then metals and miners are headed for another decline. To confirm a premature bottom, prices would have to close above 95.66. I don’t believe the cycle bottomed.
-GOLD- The bears defended $1220 well. Gold slipped back to the 10-day EMA. Prices need to hold $1198 – $1200 in the coming days to prevent additional weakness. A daily close below the $1189.50 low would prompt another bout of selling. The MACD firmly broke above the 6-month downtrend line. Consequently, I view this as a temporary 1-2 day pullback in an emerging uptrend.
-SILVER- The price action in silver can be viewed as a possible bear flag. Breaking below the $14.45 level could trigger another down leg. To reverse the bearish potential, silver needs to close above $15.00.
-GDX- Miners completed bearish engulfing patterns. Underwater longs rushed to exit after the morning gap failed. Downside follow-through tomorrow and closing below $18.80 will validate today’s bearish reversal. However, it would take a close below the short-term blue trendline to prescribe new lows. If prices fail to follow-through lower tomorrow and Thursday, then today’s bearish pattern will be invalidated, and I’ll remove my hedge. I don’t necessarily believe today’s price action, but it would have been unwise to dismiss the bearish reversal.
-GDXJ- I’m sure the bears are thrilled about today’s massive reversal in miners. It will give them the confidence they need to add new shorts. If metals and miners truly bottomed, then we should not see significant downside follow-through tomorrow or Thursday. Invalidating and closing above today’s highs would indicate a primary trend change and overconfident shorts will get crushed.
-JNUG- Decisive closes below $8.00 would suggest the bears are still in control. If prices stabilize and close back above $8.75, I’ll remove my JDST hedge.
-USLV- If prices stabilize and close above $7.00, I’ll remove my DSLV hedge.
-COMPQ- The Nasdaq composite gapped through resistance at 7950 and rallied above 8000. It looks like we have another short-term breakout. Closing below the 7950 gap at any point would indicate a correction (possibly sharp).
-WTIC- The next 39-41 day turning point arrives between September 12th & 14th. If prices are making a high at the time, it could signal a good shorting opportunity. A top between $72.00 – $73.00 would build the case for a head and shoulder topping formation.
-GBTC- I think Bitcoin and the Bitcoin trust (GBTC) are in a descending triangle consolidation after the initial post-bubble collapse. Prices continue to make lower highs. If the current rally reaches the trendline between $10.50 – $11.00 I’ll consider shorting GBTC expecting a breakdown and potential collapse below $8.00 later this year.
Have a great night.