The dollar continues to search for a bottom. Prices have been declining for 6-months, and nearly everyone is bearish. The extremly bearish sentiment should lead to a base….eventually. I would buy the current dollar weakness if gold were breaking out to new highs; prices remain below the April/June $1,298 double top.
Our expectations for a decline into a 6-Month Low are approaching validation. The intermediate trendline in gold is crucial. Violating the 5-month trendline will affirm our forecast.
I’ve received several emails concerning gold and the dollar. Members are notably bearish on the dollar and anxious/bullish on gold. I expect to see these comments reverse as gold approaches the 6-month low. Of course, gold breaking out above $1,300 would nullify my prediction.
-US DOLLAR- Nearly everyone is bearish on the dollar. This type of sentiment forms bottoms…not tops. Furthermore, gold remains below the June $1,298 high while the dollar plummets to fresh lows. The divergence supports an approaching low in the dollar.
-GOLD- Prices should test the trendline within the next few trading days. If the trendline survives the test, we will get a bounce. If it fails (an undeniable close below), the decline into the 6-month low will be verified.
-SILVER- Prices rallied to touch the 20-day EMA. We should see them rollover and head back to the $16.00 level in the coming days.
-GDX- Prices should decline below the $21.75 low by Wednesday of next week. We could see another bounce if prices stabilize around the $21.00-$21.25 support zone. If gold fails to rebound at the intermediate trendline, GDX should breakdown through support at $21.00.
-GDXJ- Prices will soon test the May trendline. We could see expedited selling once prices successfully close below $32.50.
-SPY- Prices fell right to support at 240 and bounced. A daily close back above 243 would likely spark another rally. Whereas, closing below 240 and 239 could spark a swift pullback.
-WTIC- Closing below today’s low ($44.65) could send prices back beneath the 10-day EMA. If prices pullback in a corrective manner I might consider a short-term long entry.
Gold should examine the trendline within the next few trading days. We could see accelerated selling in metals and miners if the trendline breaks.
The Weekend Newsletter will be released Sunday.