Metals And Miners Are Bouncing

Metals and Miners are bouncing as the dollar finishes what appears to be a small inverse head and shoulder bottoming pattern. If our analysis is correct, the rebound in precious metals should end next week. A daily close above 97.50 in the US Dollar will establish a breakout.

A breakout in the dollar should lead to a 1-3 month rally. Precious Metals and Miners are expected to descend into their 6-Months lows as this occurs. The lengthy bottoming process in the dollar produced an expanded double top in gold.

US DOLLAR

The bottoming process continues. The 96.30 low should hold, and a daily close above the trendline/neckline (97.50) will imply a breakout. One could argue a small inverse head and shoulder pattern.

GOLD WEEKLY 

After dropping to $1,241, gold prices rallied to close flat for the week. The Stochastics (indicator above) rolled over, and we expect prices to work their way down into the 6-Month low.

GOLD DAILY 

Prices are rebounding after touching the 200-day MA; they failed to strike the intermediate trendline. Prices could rally a bit more, but the bounce should finish next week. Once complete, we should see a breakdown below the intermediate trendline. A rally above $1,300 would invalidate our forecast for a 6-Month low.

SILVER WEEKLY 

Silver prices ended flat after sinking to $16.31. Once the intervening bounce is complete, we should see prices test the critical support zone.

SILVER DAILY 

Prices are bouncing, and we could see a brief rally to the 20/50 day moving average crossover (around $17.10). Once complete, prices should decline to critical support at $15.68.

GDX 

There was more selling into strength (220-Million) in GDX. We expect the bounce to conclude sometime next week between $23.00 and $23.50.

GDXJ 

Junior miners could test the $35.00 level and perhaps the 200-day MA before rolling over. We should then see a decline below the May trendline.

DUST 

I may consider buying DUST if prices reverse next week and maintain the short-term trendline.

JDST

I’d like to see prices hold the lower trendline. A daily close above the upper boundary would register a breakout.

SPY 

Prices are compressing along the 10-day EMA, and the sideways action will end with a sharp move. If prices break lower, we could see a swift shakeout to 240 before reversing higher.

WTIC 

Prices should be nearing an interim low. I’ll alert members if I see a setup for a short-term trade.

We are entering a decisive week. If prices follow our expectations, I’ll consider shorting miners and perhaps silver. I’ll post brief updates throughout the week as the action unfolds.