Post-Fed Metals And Miners Breakdown May Be False

By AG Thorson

Sunday, May 5, 2019 12:53 PM EDT

What a wild week. Gold prices broke lower after the Fed decision but finished Friday with a bullish engulfing day. I’m beginning to think the post-Fed breakdown in metals and miners was a false move.

It’s been a rough few years for precious metal investors. We continue to hope for a breakout and sustained uptrend. I believe we will get that, at some point, it’s just a matter of when.

Gold has another opportunity to start a trending move. The advance from August 2018 to February 2019 registered the first bullish trend readings since 2011. If these readings are correct, then we should start to see bull market behavior. In a bull market, prices maintain the 200-day MA.

If I like the prices action early next week, I may go long miners and perhaps silver.

US DOLLAR

The dollar reversed bullishly after Wednesday's Fed announcement. Prices followed through higher on Thursday, and it looked like a successful backtest of the 97.40 level. The post-Fed bullish reversal was all but nullified on Friday when prices reversed and finished the week below 97.40. It looks like the dollar may be headed lower.

GOLD

In Friday’s update, I mentioned how the August – February rally registered the first bullish trend reading in gold since 2011. To me, that means gold may finally be ready to breakout above resistance between $1360 – $1380. However, to maintain this outlook, it’s critical for gold to maintain the 200-day MA.

Something interesting happened on Friday. After a brief post-fed breakdown on Thursday, prices reversed and formed a bullish engulfing candle. That combined with the price action in the dollar leads me to believe we could see a rally next week in gold. Progressive closes above the trendline (around $1300) would signal a possible breakout.

SILVER

After the post-Fed breakdown below the descending wedge prices reversed sharply higher on Friday. I’m beginning to think Thursday’s decline to $14.57 was a false move.

PLATINUM

Prices formed a substantial bullish engulfing candle on Friday. Closing above $880 would support a potential bottom. It would take progressive closes above $920 to recommend a bullish breakout.

GDX

The price action in miners on Friday was lackluster. Nevertheless, I see the potential for a bounce or more if prices close above $20.60. It would take progressive closes above resistance near $21.50 to support a potential bottom.

GDXJ

Juniors would have to close progressively above $30.50 to support a bottom.

SPY

I still see the potential for a broadening wedge topping formation in the SPY. If correct, then prices may be approaching a significant top. A sustained rally above 300 would invalidate the bearish pattern.