By Morris Hubbartt:
The US dollar counter-trend move to the upside is probably nearing the end of the road. Firm resistance resides at the 81.25 area, and all of the indicators point to lower prices. Once the countertrend move higher is complete, the large head and shoulders top pattern should take center stage. A decline below 80.50 could trigger a mini-crash.
We may be entering the eye of the debt storm, so I prefer to buy physical metal, and hold it for long term. The immediate silver target is $35.44, and once that is acquired I am projecting that a stronger move will carry this mighty metal to the $44 area!
US Dollar End Of The Road Chart
- The US dollar counter-trend move to the upside is probably nearing the end of the road. Firm resistance resides at the 81.25 area, and all of my indicators point to lower prices.
- Once the countertrend move higher is complete, the large head and shoulders top pattern should take center stage. A decline below 80.50 could trigger a mini-crash.
- I am also forecasting lower general equity prices in the near term. That could offer some support to the dollar, but it will probably be negligible.
Gold Cup and Handle Chart
- The fiscal cliff has increased volatility in most markets. Gold is bucking that trend. An enormous cup & handle formation continues to unfold, in textbook form.
- Note the volume pattern that occurred around the time of the US election. This appears to be “weak hands” getting flushed out, and smart money covering short positions.
- Technically, the market is poised to move higher. The oscillators are in an ideal spot, and volume analysis suggests the bulls are clearly in control.
- My $1850 target should be acquired by late 2012. Early in 2013, gold should rise further, to $2015.
Dow Diamonds (Dow ETF Proxy) Crash Update Chart
- The broader market continues to struggle. A notable characteristic of the current market is major distribution on down days, and weak volume on up days.
- My technical works suggests there will be a decline to $122 for the “diamonds”, and to 12,200 for the Dow.
- In the short term, I’m looking for a rally to test the neckline of the small head & shoulders top pattern. From there, a panic sell-off could begin.
GDX Neckline Fright Chart
- Gold equity investors are generally weary. Some are afraid. Before you give up on gold stocks, I’d like to point out some key facts.
- First, the decline this week brought GDX to the key Fibonacci 61.8% retracement level. About a week ago, silver turned higher from the “Fib 50” line, and it’s held a good portion of that gain. I think that bodes well for GDX. It’s normal for gold stocks to exhibit much greater volatility than gold does during market panics.
- GDX and your favorite gold stocks could stage a surprising bounce from the Fib 61.8% line.
- The textbook double bottom pattern formed by gold stocks last summer now has a textbook pullback to the neckline area of that pattern. I would have preferred the decline to have halted near the “Fib 50” line, but this chart pattern is still very bullish.
- The power breakout volume area was also tested this week, making me confident that GDX will turn higher, and acquire my $66 target.
GDXJ Volume Analysis Chart
- The junior gold stocks have declined into important volume-based support areas (VBS). At this point in time, they look much stronger than the senior stocks.
- A pullback into the neckline area of a classic double bottom pattern is setting up GDXJ for a trending move to the upside.
- The RSI indicator is now near the 30 area, which is very bullish.
Silver Fib 50 Launchpad Chart
- Silver touched its 50% Fibonacci retracement level last week, and rallied strongly from there.
- We may be entering the eye of the debt storm, so I prefer to buy physical metal, and hold it for long term capital gains.
- The immediate target is $35.44, and once that is acquired I am projecting that a stronger move will carry this mighty metal to the $44 area!
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