The correction is far from being done. March 2008 is looking a lot like May 2006. That blowoff top was followed by a 15-month correction that required gold to touch or closely approach its 50-week moving average no fewer than half a dozen times before a sufficiently solid foundation could be built for the recent six-month bull leg. Similar base-building may be expected this time, in which case it isn't likely that gold will surpass this month's high before late autumn, at the earliest.
GOLD (daily)Upside: No clear indication.
Resistance: 50-day MA; bottom of channel.
Downside: RSI was rebuffed at 50. MACD is now below zero and continues to decline.
Support: February low and Fibonacci 38.2% retracement level at $888; Fib 50% level at about $843; Fib 61.8% level at a little below $800, in the vicinity of the rising 200-day MA.
Bottom line: Gold managed a brief bounce and may now be in the C leg of an ABC correction.
GOLD (weekly)Upside: No clear indication.
Resistance: Top rail of channel.
Downside: Gold's bounce failed at the top rail of the channel. MACD has made a bearish crossover.
Support: November's high of $848; rising 50-week MA.
Bottom line: Plenty of room for RSI and MACD to fall before gold is no longer severely overbought.
SILVER (daily)Upside: Silver is sitting on possible support at the thin blue channel line and the purple line joining the November and January highs, which offered support in February.
Resistance: 50-day MA; thick blue channel line.
Downside: Silver's bounce failed precisely at the thick blue channel line. RSI was rebuffed at 50. MACD is now below zero and continues to decline.
Support: November high and Fibonacci 50% retracement level at about $16.25; Fib 61.8% level at around $15, in the vicinity of the rising 200-day MA.
Bottom line: Like gold, silver managed a brief bounce and may now be in the C leg of an ABC correction.
SILVER (weekly)Upside: RSI is approaching 50, where it could bounce.
Resistance: Thin blue channel lines.
Downside: Silver's bounce failed to reach the upper thin blue channel line. RSI is falling. MACD has made a bearish crossover.
Support: Bottom thick blue rail of channel; thick blue downtrend line, in the vicinity of the 50-week MA.
Bottom line: Plenty of room for MACD to fall before silver is no longer severely overbought.
GDX (daily)Upside: No clear indication.
Resistance: Bottom rail of channel at around 50, in the vicinity of the falling 50-day MA.
Downside: The gold-mining ETF's bounce failed at the bottom rail of the channel. RSI couldn't reach 50 before turning down. MACD is below zero and falling.
Support: 200-day MA at around $45.
Bottom line: GDX managed a brief bounce and may now be in the C leg of an ABC correction.
GDX (weekly)Upside: RSI is near 50 and could bounce from here.
Resistance: Top rail of blue channel.
Downside: MACD has made a bearish crossover.
Support: Top rail of purple channel at around $45, in the vicinity of the rising 50-week MA; bottom rail of blue channel.
Bottom line: Plenty of room for MACD to fall before GDX is no longer severely overbought.
U.S. DOLLAR INDEX (daily)Upside: The dollar's bounce failed at the bottom rail of the channel, but the index is turning up again, as is MACD. RSI found support at 30.
Resistance: Bottom rail of channel; 50-day MA; top rail of channel.
Downside: It is conceivable that the index is forming a tiny flag, in which case it could continue to fall.
Support: Recent all-time low at 70.7.
Bottom line: Plenty of room for MACD to rise before the dollar is no longer oversold.
U.S. DOLLAR INDEX (weekly)Upside: RSI has popped out of the oversold zone and made a bullish divergence.
Resistance: Bottom of falling wedge.
Downside: MACD made a bearish crossover and continues to decline.
Support: All-time low at 70.7.
Bottom line: Plenty of room for the dollar to rise before it is no longer oversold.
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