Everything seems to be on track, and precious metals and miners should reach a tradable low next week. The only fly in the ointment is silver. A bullish engulfing pattern formed on Friday when prices rallied back above $17.00. However, volume was modest, so I think it was just temporary short covering.

Miners closed just once below their 10-day EMA’s. Prices should reach a minimum 38.2% retracement level before even attempting to produce a bottom, a 50% retracement is more likely.

The dollar is overdue for a bounce, and we should get one next week. A close above the 10-day EMA is needed before the rebound officially starts.

The FED announces on Wednesday, and the non-farm payroll numbers are out Friday. Expect volatility surrounding these events.


-US DOLLAR- The dollar looks to have put in an interim low, but prices were unable to close above the 10-day EMA on Friday. A low can’t be established until that happens.


-GOLD WEEKLY- Prices formed a weekly bearish engulfing pattern. We are still expecting a low next week. A sharp decline into an 8-year cycle low is unlikely. It would take prices breaking below the $1,124 level to restore that potential.


-GOLD DAILY- Prices should drop a little more next week as the dollar bounces.


-SILVER WEEKLY- The weekly silver chart was on the verge of forming a bearish engulfing pattern similar to gold, but Friday’s rally rescued it.


-SILVER DAILY-Silver was bouncing modestly on Friday, but shorts were squeezed when prices surged above $17.00. This activity produced a bullish engulfing candle. It may be nothing, but it could suggest a shallow cycle low. A shallow cycle low would imply a strong bullish undercurrent and that prices could move quickly higher. I will address buying strategies if prices follow-through and close above the blue trendline ($17.45) next week.


-GDX- Prices haven’t dropped far enough to register a correction. They need to fall to at least the 38.2% retracement level ($22.08) before considering a bottom.


-GDXJ- The junior mining ETF needs to drop to at least $34.29 before registering as a genuine correction.


-SPY- Prices look like they want to pullback to the 10-day EMA and close the gap before continuing higher. However, closing below the 20-day EMA would imply that this was a false breakout and that prices are starting a more meaningful correction. In that event, I may enter a small short position.


-WTIC- As long as prices remain below $55.24 the intermediate cycle is left translated. I will use a close below the 50-day EMA as a signal to enter shorts. Note: Prices could meander sideways for two more weeks before breaking down.


The price action early next week should tell us what we need to know regarding metals and miners. I’ll look for bottoming action late next week. As prices approach their respective target areas, I’ll cover entry strategies and stops. Expect frequent updates throughout the week.