Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18
Gold Asks: Are US Bonds Overvalued? - 11th Nov 18
Why the Stock Market Will Pullback Before Heading Higher - 11th Nov 18
GDX - Will you Buy This Hated Stock with Me? - 11th Nov 18
Christmas and Halloween LED Dynamic Projector Light Review - 11th Nov 18
Wall Street Veteran: Why I Don’t Lend to Family and Friends - 10th Nov 18
Stocks Breaking Higher, but Resistance Ahead - 10th Nov 18
Stock Market Was Supposed to “Crash Like 1987” - 10th Nov 18
SPX : The Incredibull Stock Market Plays On - 9th Nov 18
USD/CAD – The Moment of Truth Is Coming - 9th Nov 18
Is the Stock Market’s Rally “All Good To Go”? - 8th Nov 18
End in Sight for 'Unloved' Silver - 8th Nov 18
Outlook for Gold & Silver Precious Metals Sector is 'Positive' - 8th Nov 18
A Great Day for Metals as Platinum Price Breaks Out - 8th Nov 18
Future US Interest Rates, Financial Markets, and the FED - 8th Nov 18
Buying an Approved Used Land Rover From a Dealer - What You Need to Know! - 8th Nov 18
USD’s Weekly Breakout and the Gold Golden Spring - 7th Nov 18
Stocks Made a Post-crash Bounce. What’s Next? - 7th Nov 18
The Fourth Turning & War Of The Worlds - 7th Nov 18
The Economic Costs of Corruption in Philippines - 7th Nov 18
Stock Market Counter-trend Rally - 7th Nov 18
Britain's Unreliable Railways - Transpennine Express to Manchester Airport - 7th Nov 18
US Midterm Elections Forecast 2018 - 6th Nov 18
Stock Market’s Short term Outlook is Slightly Bearish, But Medium term is Bullish - 6th Nov 18
Financial Markets Are Making Faulty Assumptions about Growth & Resources - 6th Nov 18
Trump's War on the Fed - 6th Nov 18
Positive Implications for Gold Miners if Crude Oil Breaks Down - 6th Nov 18
Top Tips for Buying an Approved Used Land Rover from a Main Dealer - 6th Nov 18
What Every Investor Can Learn from Gamblers - 6th Nov 18
Is the Gold Bull Back? - 5th Nov 18
Gold Stocks Winter Rally - 5th Nov 18
The Cycle Saving Home Buyers $3,000 Per Year Just Ran Out Of Fuel - 5th Nov 18
Gold Stocks are Not Close to Bottom - 5th Nov 18
Stock Market Sharp Corrections and Bounces are Usually Followed by Retests - 5th Nov 18
London Dungeon Merlin Attraction Tourist Review - 5th Nov 18
Everything You Need to Know About Medicare in the United States - 5th Nov 18
Banking Stocks Index Signals Bank Failures - 4th Nov 18
IKEALand - New Theme Park Opens in Sheffield! - 4th Nov 18
London Eye Giant Ferris Wheel Ride Review - Top UK Tourist Attractions 2018 - 4th Nov 18
5 Major Factors Affecting the Direction of EUR/USD - 4th Nov 18

Market Oracle FREE Newsletter

Trading Any Market

US$ Breakout Could Unleash Capitulation in Gold and Silver

Commodities / Gold and Silver 2015 Nov 14, 2015 - 09:16 AM GMT

By: Jordan_Roy_Byrne

Commodities

Last Friday we wrote that precious metals were very oversold and due for a bounce or a pause. We also argued that the overall prognosis remained very bearish. The technicals argue for more downside and sentiment indicators remain far from bearish extremes. The strength in the US$ index is another reason precious metals should remain under pressure. If the US$ index makes a strong break above 100 it could trigger a final wave of liquidation in Gold and Silver.


The US$ index has spent much of this year consolidating and digesting its huge advance from summer 2014 into 2015. After surging nearly 25% within eight months, the greenback has managed to hold above previous resistance (2004-2005 highs and 2008-2010 highs) and the 38% retracement of the advance (at 92). Today it is trading less than 1.2% from a new high. These are signs of strength and typically precede a breakout to the upside rather than a move lower.

US Dollar Index Weekly Chart

As one would expect, the very bullish outlook for the US$ stands in contrast to the outlook for precious metals. Below we plot the weekly candle charts of Gold and Silver. The swift decline over the past few weeks confirms that the recent rebound was essentially a retest of the summer breakdown to new lows. When a market breaks a key level it will often retest that break in a counter trend move. The break is confirmed when the market reasserts itself in the direction of the break. That is precisely what has occurred in Gold and Silver over the past few weeks. We should also note that the eight month consolidations project to much lower targets than current levels.

Gold and Silver Weekly Charts

A big breakout in the US$ index above 100 would likely coincide with precious metals moving to new lows. Last week we published Gold's monthly chart which has strong support targets at $970/oz and $890/oz. Gold is trading at $1082/oz as we pen this. Many Gold bulls think that the bear has already gone far enough and that further losses are highly unlikely. While that could make sense in theory, the reality is further losses are definitely possible in the weeks ahead. As Gold bulls we do not want to be buyers until we see a sector that becomes extremely oversold and is trading near strong support levels amid extreme bearish sentiment.

As we navigate the end of this bear market, consider learning more about our premium service including our favorite junior miners which we expect to outperform into 2016.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2018 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

6 Critical Money Making Rules