A Strategy For The Buy Low, Sell High Mantra

Speaking of the USD Index, it’s breaking above increasingly more resistance lines.

(Click on image to enlarge)

Chart, histogramDescription automatically generated

Figure 3 - USD Index, USD, GOLD and CORR Comparison

After confirming the breakout above the very short-term declining resistance line, the USD Index has now broken above the declining dashed line that’s based on the March 2020 and September 2020 tops.

With the correlation between the USD index and gold (bottom part of the chart) being strongly negative, the USD’s breakouts are bullish for gold. Namely, they tell us that after a breather, the USD Index is likely to continue its rally, while precious metals are likely to fall.

The next big move in the PMs is likely to take place once gold breaks below its rising support line, and that’s likely to happen relatively soon. Moreover, please note that the existence of the support line is – by itself – a reason for gold to correct before sliding. This makes the theory of yesterday’s (Jan. 11) reversal not being a true reversal even more valid.

All in all, it seems that the precious metals sector is about to decline once again, if not immediately, then shortly.

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Disclaimer: All essays, research, and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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