Retreat forms new channels

In their retreat from their recent rallies, gold and silver have formed new, wider channels parallel to the existing ones. A breakout from these new channels would be necessary for the precious metals to continue their advance, but that could take a while. Interestingly, GDX, after its precipitous decline, appears to be bouncing from a new channel line parallel to and below the existing channel, underscoring its relative weakness, which does not bode well for gold's immediate prospects.

GOLD (daily)

Upside: Gold has bounced off support at its rising 50-day MA. RSI has turned back up above 50. MACD-Histogram is flattening out.

Resistance: Fibonacci 23.6% retracement level around $944; top rail of new, wider channel at around $970.

Downside: The yellow metal may be stalling out just below the Fib 23.6% level. MACD has made a bearish crossover.

Support: Rising 50-day MA at $915.28; old downtrend line a little above $900.

Bottom line: Gold could consolidate for a while within its new, wider channel.

SILVER (daily)

Upside: RSI and MACD-Histogram have flattened out and appear to be turning upward.

Resistance: Flat 50-day MA; top rail of blue channel; thin magenta line.

Downside: Retreating from the top rail of its new, wider magenta channel, silver has crashed through the top rail of its blue channel and its 50-day MA, indicating that its breakout was a fakeout, after all.

Support: Rising 200-day MA at $16.67; bottom of magenta channel.

Bottom line: The retest of silver's breakout has failed, and the white metal could consolidate within its wider magenta channel for a while.

SILVER (weekly)

Silver is looking for important support at the thick blue bottom rail of its long-term channel, just below the Fibonacci 38.2% retracement level. Next support, at the Fib 50% level, is more than a dollar below, at $16.26, just above the 50-week MA. RSI is falling toward 50, where it could find support, but MACD has failed to make a bullish crossover, an ominous sign.

GDX (daily)

Upside: GDX has bounced on moderate volume and with long lower tails off the bottom rail of its new, wider channel. RSI appears to be flattening out.

Resistance: Flat 50-day MA at $46.29; flat 200-day MA at $47.69.

Downside: GDX crashed through its 200-day and 50-day MAs to close the gap at $44. RSI is back below 50. MACD has made a bearish crossover.

Support: Bottom rail of new, wider channel; double bottom at $41.61.

Bottom line: The gold-mining ETF could consolidate within its wider channel for a while.

GDX (weekly)

The gold-mining ETF is just above important support at the Fibonacci 50% retracement level around $44.50. Ominously, MACD has failed to make a bullish crossover.

U.S. DOLLAR INDEX (daily)

Upside: The index has re-entered its green channel, indicating the breakdown was a fakeout, and sits just above its falling 50-day MA. RSI is back above 50. MACD has made a bullish crossover.

Resistance: Blue trendline and falling 200-day MA, currently at 74.4.

Downside: RSI appears to be flattening out.

Support: Falling 50-day MA; bottom rail of channel.

Bottom line: Propelled by the reaction to its false breakdown, the dollar could reach the blue down trendline before resuming its decline.