I was expecting gold to throw us a curve-ball and I think we saw it last week. Tuesday’s spike in metals and miners forced shorts out of their positions, and buyers rushed in suspecting a breakout. The shakeout has set the stage for the next move.

If our curve-ball theory holds, gold should decline 4-8 weeks into an extended 6-Month cycle low. A weekly close above $1,300 would nullify our hypothesis and confirm a major breakout in gold.

The Fed announces on Wednesday. Markets are anticipating a 99.6% chance for a rate hike. The price action Thursday and Friday is key.

-US DOLLAR- The Dollar closed above the 10-day EMA. If prices made a significant low, we should see prices rally for at least 1-2 months and beyond the trendline. If price moves explosively through the trendline, we could see an attempt at new highs.

-GOLD WEEKLY- A bearish candle formed at the long term trendline. Prices failed to close above the April closing high ($1,289.10). The probabilities favor a 4-8 week decline into an extended 6-Month cycle low. However, a weekly close above $1,300 would establish a bull market breakout.

-GOLD DAILY- Prices closed below the 10-day EMA, and a top is likely. A daily close below $1,265 will confirm. Gold should break the trendline and provide a failed daily cycle before reaching a 6-Month low.

-SILVER WEEKLY- Prices formed a bearish engulfing candle after striking the 200-Week MA ($17.75). A retest of support between $15.67 and $16.00 is likely. Breaking sharply through that level could lead to increased selling pressure.

-SILVER DAILY- It appears prices peaked and will work their way lower to the $16.00 support zone.

-GDX- Tuesday’s explosive move higher was apparently a false breakout. Prices closed the gap on Friday. We should see a move back to the $21.00 support level, and if broken, a drop to $18.50 is reasonable. I will alter my perspective if GDX breaks convincingly above the upper trendline.

-GDXJ- Juniors tested and reversed at the upper trendline. Breaking the May trendline will lead to a test of the December $27.37 low.

-DUST- Tuesday’s shakeout startled most traders out of their positions, including me. I’ll reenter half of my position if prices close above the trendline. If I like what I see after the Fed meeting, I’ll add the other half.

-JDST- If DUST closes above its trendline, I’ll reenter half of my JDST position.

-SPY- Stocks swung wildly on Friday. Prices fell to and held the 242 level. A rally to 246+ is still expected. However, a daily close below 241 would challenge that outlook.

-WTIC- Prices are consolidating after Wednesday’s sharp decline. The formation of a swing low (close above $46.18) will signal a bounce. Failure to form a swing low could lead to another sharp decline that tests the $43.76 low.

Expect a volatile week. I’ll update members if I reenter positions in DUST and JDST.

I’m in the process of moving. We close on our new house Thursday at 4:00 PM. The Thursday report will be delayed.

Have a great weekend.