Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
A Global Eurodollar Shortage - 27th Feb 17
Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - 27th Feb 17
Stock Market Breakout or Breakdown? - 27th Feb 17
Peak American Wealth – Revisited - 27th Feb 17
Oscars Debacle – Movies More Costly As US Dollar Devalued - 27th Feb 17
Stock Market Short-Term Uncertainty As Stocks Fluctuate Along New Record High - 27th Feb 17
Dow vs Precious Metals : Where’s The Beef ? Where’s the Bull ? - 27th Feb 17
Stock Market Sentiment at ‘Extreme Greed’ - 26th Feb 17
Trump Relinquishes Control of Foreign Policy - 26th Feb 17
[Gratis] "Dark Money" Secrets Revealed! - 26th Feb 17
Stock Market SPX New All-time Highs Continue - 25th Feb 17
POWERFUL GOLD & SILVER COILED SPRINGS: Important Charts You Have To See - 25th Feb 17
Underperformance in Gold Stocks Argues for Interim Peak - 25th Feb 17
Watch What Happens When Silver Price Hits $26...  - 25th Feb 17
Gold Futures Buying Yet to Start - 25th Feb 17
When the Stock Market Flying Pig Tops - 24th Feb 17
Gold, Second Fed Hike and Interest Rates - 24th Feb 17
Bitcoin Price Hits Record High! - 24th Feb 17
Another Stock Market Bubble? Bring it On! - 24th Feb 17
What Investors Need To Know About U.S. Money Market Funds? - 24th Feb 17
When Was America’s Peak Wealth? - 24th Feb 17
The Oscars – Worth Their Weight in Gold? - 24th Feb 17
The Best Reasons to Buy Gold in the Age of Trump - 22nd Feb 17
Silver, The Return of Stagflation - 22nd Feb 17
Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - 22nd Feb 17
Gold: Short End US Rates Matter More Than Long End Real Yields - 22nd Feb 17
CONTINENTAL RESOURCES: Example Of What Is Horribly Wrong With The U.S. Shale Oil Industry - 22nd Feb 17
Here’s Proof Rising Rates Are Good for Gold - 21st Feb 17
Gold and Silver Weekly Update - 21st Feb 17
US Dollar and Gold Battle of the Cycles - 21st Feb 17
NSA and CIA is the Enemy of the People - 21st Feb 17
Big Moves in the World Stock Markets - Big Bases - 21st Feb 17
Stock Market Uptrend Continues - 21st Feb 17
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Dollar Trend and Gold Technicals and Hint at Further Downside

Commodities / Gold and Silver 2010 Jan 11, 2010 - 01:29 AM GMT

By: Douglas_V._Gnazzo

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleThis past week the dollar did not seem to have as great of an impact on other markets as it usually does. Some investors believe a decoupling is taking place. I’m not convinced, at least not yet.

One week does not constitute a trend. The dollar’s December rally did not negatively affect the stock market, however, that may not continue to be the case. Time will tell. As the charts below show, the dollar has formed a falling flag. Whether the dollar breaks up or down out of the flag will have repercussions in other markets.  


The dollar index fell 0.49 to close the week at 77.45 for a loss of 0.63%. Up first is the daily chart of UUP. The first thing to note is that MACD has made a negative crossover, which suggests further downside action, especially if RSI breaks below 50.

Resistance at 23.00 was eventually broken above, as targeted in recent reports; however, price has since backed off and is slowly declining in a falling flag formation. If price breaks below the bottom of the flag, more downside is likely. If price breaks out above the upper trend line – the rally will continue.

Note that a 50% retracement of the rally from 22 to 23 comes in around 22.50. The dollar could fall to this level and still resume its upward rally.

The weekly $USD chart shows MACD making a positive crossover, which suggests there is more intermediate term upside action possible. RSI would need to clear 50 for any rally to obtain.

Overlaid on the chart are the Fibonacci retracement levels from the March dollar high, which coincided with the March lows in stocks & commodities, to the recent Nov. dollar low. The first Fib level (38%) is at 80.11. Overhead resistance is marked at 78. Note the dollar has made a higher low, while gold made a lower high.

The monthly chart shows RSI readings at the top connected by vertical dotted lines to STO readings at the bottom of the chart that have signaled rallies in the past. The yellow resistance bands would need to be broken above if the dollar is to rally further.

Whether the dollar falls or rallies will have an effect on the precious metal markets, the commodity markets, and most likely the stock market as well. More proof needs to be seen before decoupling can be said to prevail.

Gold
With the dollar falling 0.63% gold had a good week, rallying up $40.80 to close at $1137.30 for a gain of 3.72%. Gold rallied 6 times the amount the dollar lost. The daily GLD chart below shows a rising flag taking shape. Gold is testing the upper trend line, with horizontal resistance marked just above (red line).

MACD shows a positive crossover still in effect. RSI is above 50, but is flattening out. If gold can break out above the flag formation and overhead resistance, a rally back up near its highs is possible. Conversely, if gold breaks below the flag, horizontal support at 105 comes into play.

Gold has a rising flag forming, while the dollar has a formed a falling flag. The first is usually resolved bearishly, while the latter tends to be bullish, although neither is a given. Presently, the dollar and gold are trending inversely to one another. How the flags are resolved will substantiate or deny the decoupling of the dollar from gold and other commodities.

The weekly chart shows a negative MACD crossover with the histograms flirting with negative territory. Together, the two hint at more downside action to come; however, STO looks like it may be about to turn up.  Overlaid on the chart are the Fibonacci levels coming out of the April low to the Nov. high. Price bounced off support at the first Fib level (38.2%) at $1086.58.

Silver
Silver had a stellar week, rising $1.61 to close at $18.47, for a gain of 9.74%. The daily chart shows silver in a rising price channel since February.

Presently, silver is above its 50 dma, horizontal support at $18, and it’s in the upper half of its price channel.

MACD is under a positive crossover and RSI has room to rise before it reaches overbought territory, if it has a mind to.

The weekly chart is close to making a positive MACD crossover, which would be a bullish development. STO needs to cross up through the 50 level for the rally to obtain. Volume expanded on the move, but not as much as it did during the recent decline.

Overlaid on the chart are the Fib levels coming out of the 2008 low and rising up to the 2009 high. Notice that silver has not yet corrected back to its first Fib level (38%) at 15. So far, silver has hung tough.

Gold Stocks
Gold & silver stocks had a good week, with the GDX rising almost 8% to 49.84. The daily chart shows price breaking below its rising price channel and subsequently rallying back up to regain the channel. Broken resistance at 48 has now become support.

MACD is under a positive crossover with rising histograms. Notice the vertical dotted lines that connect CCI readings breaking below 100 with the start of past corrections, followed by negative MACD crossovers. Watch CCI levels breaking below 100 to signal a possible reversal.

The weekly chart shows the GDX approaching overhead resistance, with a negative MACD crossover present. Histograms have turned negative as well. Declining money flows (CMF) are not encouraging and will need to change if a rally is to be sustained.

There are rumors of platinum and palladium exchange traded funds (ETF’s) waiting in the wings, and the talk sparked significant rises in a couple of metal producers: Stillwater Mining (SWC) and North American Palladium (PAL). Both have recently been highlighted on our stock watch list. Stillwater produces platinum and PAL mines palladium.

The above excerpt is from this week’s full market wrap report (35 pgs) available only at the Honest Money Gold & Silver Report website. The full report includes our directional market indicator table, proprietary stock watch list, and model portfolio allocations. Stop by and check it out. A free trial subscription is available by emailing your request to: dvg6@comcast.net.

Good luck. Good trading. Good health, and that’s a wrap.

Come visit our website: Honest Money Gold & Silver Report
New Audio-Book Now Available - Honest Money  

Douglas V. Gnazzo
Honest Money Gold & Silver Report

About the author: Douglas V. Gnazzo writes for numerous websites and his work appears both here and abroad. Mr. Gnazzo is a listed scholar for the Foundation for the Advancement of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

Douglas V. Gnazzo © 2009 All Rights Reserved


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife