Monday, June 2, 2008

Dollar strong again, gold weak again

Gold and silver ended their short-lived rallies and are in downswings as the U.S. dollar found support at the bottom of a new upward-sloping channel and continues to rise within it.

GOLD (daily)

Upside: RSI rising.

Resistance: Round number at $900; falling 50-day MA, currently near $906.

Downside: Gold is back below its 50-day MA. RSI is back below 50. MACD is poised to make a bearish crossover.

Support: Rising 200-day MA, currently near $844; Fibonacci 50% retracement level at about $843.

Bottom line: Gold's failure to stay above its 50-day MA resulted in an abrupt decline that is likely to continue.

SILVER (daily)

Upside: RSI rising. Support found at about $16.50.

Resistance: Falling 50-day MA, currently at $17.36; magenta line.

Downside: Silver is back below its 50-day MA. RSI is back below 50. MACD is making a bearish crossover.

Support: Recent support at about $16.50. Rising 200-day MA, currently at $15.73.

Bottom line: Silver's failure to stay above its 50-day MA resulted in an abrupt decline that is likely to continue.

GDX (daily)

Upside: RSI rising.

Resistance: Flat 50-day MA, currently near $47; bottom rail of red channel.

Downside: GDX has broken down from its steeply sloped blue channel and is back below both its flat 50-day MA and gently rising 200-day MA. RSI is back below 50. MACD is poised to make a bearish crossover.

Support: Double bottom at $41.61.

Bottom line: If the most recent blue channel serves as a flag, like the one before it, GDX has quite a lot of room to fall.

U.S. DOLLAR INDEX (daily)

Upside: The index found support at the bottom rail of its new green channel and is now back above its flat 50-day MA. RSI is back above 50. MACD is poised to make a bullish crossover.

Resistance: Top rail of green channel; top rail of blue channel.

Downside: No clear indication.

Support: 50-day MA, which is flattening out and currently at 72.44; bottom rail of green channel; bottom rail of blue channel.

Bottom line: Dollar's rally likely to continue.

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