Gold soars, dollar plunges

Gold has finally broken into the four figures as the U.S. dollar plumbs new lows. On the long-term charts, gold is extremely overbought; the dollar is extremely oversold, but less so. If the buck continues to plummet, gold could surprise further on the upside.

GOLD (daily)

Upside: RSI is rising, and MACD has made bearish and then bullish crossovers in quick succession.

Resistance: Friday's intraday high of $1,009 at top rail of channel.

Downside: Top rail has offered reliable resistance since start of bull leg last summer. RSI, at 70, is at threshold of overbought zone.

Support: Bottom of channel; green uptrend line; 50-day MA.

Bottom line: That gold should test round-number resistance at $1,000 is not entirely unexpected. More than a skirmish is likely here between bulls and bears.


GOLD (weekly)

Upside: Gold continues to advance after breaking out of apparent channel. RSI and MACD still rising.

Resistance: $1,000.

Downside: Gold a long way above its 50-week MA. RSI and MACD extremely overbought. MACD-Histogram failing to confirm advance.

Support: Top rail of channel.

Bottom line: Pullback to top rail possible in not-too-distant future.


SILVER (daily)

Upside: Silver found support early in week at thin blue uptrend line, and then at green uptrend line. RSI rising.

Resistance: Top of channel; $21; $21.33.

Downside: Thursday's shooting star and Friday's doji at the top rail of the channel together form a bearish tweezer top.

Support: Green uptrend line; thin blue uptrend line; bottom of channel.

Bottom line: Topping process may continue.


SILVER (weekly)

Upside: Silver has yet to reach top of channel. RSI, while overbought, hasn't reached levels seen at March 2004 and May 2006 blowoff tops.

Resistance: Top of channel.

Downside: MACD has exceeded level seen at May 2006 blowoff top.

Support: Thin blue uptrend line at around $19.

Bottom line: Silver could climb to top of channel, then collapse, as in 2006.


GDX (daily)

Upside: GDX broke through red line joining November and January tops on Thursday, tested it on Friday and hasn't yet reached top of channel. RSI rising. MACD has bounced off its signal line.

Resistance: Top of channel.

Downside: No clear indication.

Support: Red line; 50-day MA.

Bottom line: GDX may have sufficient momentum to reach top of channel.


GDX (weekly)

Upside: GDX has broken out of its blue channel. RSI has negated the potential bearish divergence. MACD has made a bullish crossover.

Resistance: None.

Downside: Volume is declining.

Support: Top rail of blue channel.

Bottom line: Already in record territory, GDX is poised to go higher still, although a pullback to test the top of the blue channel is possible.


U.S. DOLLAR INDEX (daily)

Upside: MACD-Histogram failing to confirm dollar's recent plunge.

Resistance: Bottom rail of channel.

Downside: Dollar rose to test bottom rail of channel from which it had broken down; it was repelled in no uncertain terms, plunging rapidly to close on Friday at 71.67, yet another all-time low. RSI still falling.

Support: Fibonacci line at around 70.26.

Bottom line: The index could reach or overshoot the Fibonacci target before mounting a relief rally.


U.S. DOLLAR INDEX (weekly)

Upside: No clear indication.

Resistance: A little below 75.

Downside: RSI falling. MACD has made a bearish crossover.

Support: None.

Bottom line: While oversold, RSI and MACD are not at extreme levels, so the dollar could fall a long way more.