Dollar In Transistion
We are in the middle of the transition phase as the dollar bottoms and precious metals top. It’s hard to forecast the day-to-day price changes during this stage of the expansion. Nonetheless, it should wrap up sometime next week.
Our interpretation of the 6-Month cycle in gold miners supports lower prices in April and May. If we are correct, a clear downtrend should develop by the first week of April and prices should descend below the March lows. Our theory is holding, but it is yet to be confirmed.
We could see more back and forth action next week. The next swing high in precious metals should mark the top to this rebound. The 200-day MA’s in the dollar, gold, and silver should restrict prices.
-US DOLLAR- Dollar prices have consolidated since Wednesday, and it is unclear if the cycle bottomed. A quick spike down to the 200-day MA is still conceivable before reaching a low.
-GOLD- Prices were unable to complete a swing high on Friday, and now we need a daily close below $1,240 to imply a top. If the dollar spikes down to touch the 200-day MA, gold could spike up to its 200-day MA ($1,263) before printing a cycle high.
-SILVER- Prices rallied and closed inside the resistance box. The 200-day MA should keep a lid on this rebound.
-GDX- Prices have essentially gone nowhere since the March 15th rate hike. $23.56 could be the rebound high, but it won’t be confirmed until we have consecutive closes beneath the 10-day EMA. We could see more backing and filling next week. A clear downtrend should develop by the first week of April. If our analysis is correct, prices should breach the $21.14 low by April 11th.
-NUGT- The resistance level for NUGT remains.
-GDXJ- Junior miners are trading below the March 15/16 spike high. We could see more backing andfilling next week. A clear downtrend should develop by the first week of April. If our analysis is correct, prices should breach the $32.66 low by April 11th.
-JNUG- The resistance level for JNUG remains.
-SPY- If stocks are unable to rally and breakout above the upper trendline they risk dropping to the 200-day MA this Spring.
-WTIC- Little has changed, and the 10-day EMA should contain prices going forward. Closing below $47.00 will set the path to $42.00-$43.00.
I will continue to hold the short positions in oil anticipating lower prices into May. I might consider shorting precious metals if there are clear signs of a reversal next week. I’ll post a short-term trade idea if a setup occurs.
Disclosure: None.