Has Gold's Rally Finally Fizzled?

Miners have dropped enough to support the formation of a daily cycle low. However, the correction thus far in gold and silver has been minimal, and it would create another shallow retracement if metals bottomed Friday. The odds of back-to-back shallow corrections is low. Consequently, I prefer to wait for a swing low to form before attempting to play the next rally.

Furthermore, Gold and Silver formed Weekly Bearish Engulfing candles, supporting the possibility of a 6-Month cycle high. Prices would have to close above last week’s highs (weekly basis) to extend this cycle. Although new cycle highs are possible, the sharp selling and glaring divergence in miners are more suggestive of a top.

Oil looks like it may be in the process of rolling over, and I’ll monitor prices closely next week. If prices fail to retake the $54.25 level, we could see an accelerated decline. I’ll probably buy put options in oil futures if a sell triggers

The unemployment report Friday, March 10th and the next Fed meeting (March 15th), could trigger a market event. The probability for a March increase remained at 79.7% after Yellen’s speech. The odds will vacillate before the meeting; over 80% sponsors a rate hike.

-US DOLLAR- The dollar reversed after breaking above the 101.75 level, completing a swing high. An interim top could be in place. However, a daily close below 100.90 is required to confirm a top.

-GOLD WEEKLY- Another Bearish Engulfing pattern formed and the upswing from December may have ended. A weekly close below $1,200 would confirm a 6-Month Cycle high. The decreasing volume ridge reset with this week’s Bearish Engulfing candle.

-GOLD DAILY- Prices are dropping into a daily cycle low after reaching the 200-day MA. The decline into Friday’s low is nearly identical to the previous low ($1,179) established in January (quick & shallow). It’s possible the cycle bottomed, but I’d like to see a daily close above $1,245 to be sure.

-SILVER WEEKLY- After 9-Consecutive up weeks (very rare) prices formed a Bearish Engulfing candle. The Slow Stochastics dropped back below 80, and we may have a 6-month cycle top. A weekly close below $17.00 would confirm.

-SILVER DAILY- Prices typically close beneath the cycle trendline before attempting a cycle low, they haven’t. Also, it would be rare for a cycle to bottom after just two down days. Silver would have to close above $18.20 to support an interim low.

-HUI- It’s been 4-trading days since the recognition day and prices may be putting in an interim low. A daily close above 195 would validate. However, the next bounce/rally would need to close above 212 to reverse the bearish trend.

-GDX- Prices need to close above $22.50 to mark a daily cycle low. Then prices would have to rally and close above the $24.60 BreakPoint to restore the bullish perspective. Courageous traders can attempt to buy the interim low and hope it retakes the breakpoint. I’d wait for a confirmed price swing (close above $22.50) due to the intense volatility.

-XAU- Thursday’s close below the 61.8% retracement level further supports a 6-Month Cycle top. Closing above Friday’s high (82.73) will form a swing low, and closing above 84.00 will confirm the interim low. Once the low is established, prices would need to close above the BreakPoint to remove the potential to test/break the December low.

-GDXJ- Prices dipped below $34.00 and reversed. Closing above $36.00 should mark a cycle low, and closing above $37.00 will confirm. Courageous traders can attempt to buy the interim low and hope it retakes the breakpoint. Volatility is high so keep positions small. It might be wise to wait for a confirmed price swing (daily close above $36.00).

-WTIC WEEKLY- Closing below the 10-week EMA would have confirmed at a significant top. Prices rallied just enough on Friday to settle above it. I’ll continue to watch for another shorting opportunity.

-WTIC DAILY- Prices bounced after finally closing below the 50-day EMA. The $53.55-$54.25 zone should contain prices if they are immediately turning lower. Closing back above $54.25 would postpone the selloff. A breakdown in MFI (above) will confirm the downswing I’ve been expecting.

There is too much conflicting data in metals and miners for me to get excited about taking long positions. The potential drop in oil seems like a better short-term setup. Nevertheless, I’ll advise members if/when a swing low forms for those eager to play the rally in metals and miners.

Have a wonderful weekend.