Sharp pullbacks

Gold experienced a sharp pullback in its steep upward trajectory. Silver and GDX, which both tend to be more volatile than the yellow metal, experienced more substantial pullbacks. The rallies of all three are likely to continue -- with a retest of the breakout points if necessary, in the case of the metals. A failure of any such retest would be ominous.

GOLD (daily)

Upside: Gold is still above its initial breakout high and the Fibonacci 23.6% retracement level from its all-time high.

Resistance: Tuesday's high of $989.69; round-number resistance at $1,000; all-time high of $1033.90.

Downside: RSI was repelled at 70 and is declining. MACD-Histogram is showing a weak negative divergence.

Support: Initial breakout high at around $950; Fib 23.6% retracement level at around $944; old downtrend line a little above $900.

Bottom line: Gold has retraced about half of its nearly $80 rally after testing its breakout. The yellow metal should resume its rise soon, although it may consolidate for a while.

GOLD (weekly)

Gold pulled back precisely at resistance supplied by the top rail of its channel, as suggested in last week's post. MACD has made a bullish crossover, which indicates an intermediate-term rise in the yellow metal.

SILVER (daily)

Upside: Silver is near support at the top rails of its blue and magenta channels.

Resistance: Tuesday's high of $19.55; round-number resistance around $20; March high of $21.44.

Downside: RSI was repelled at 70 and is falling sharply toward 50. MACD appears poised to make a bearish crossover.

Support: Old downtrend line and magenta line at about $18; rising 50-day MA at $17.48.

Bottom line: Silver looks headed for a crucial retest of its breakout.

GDX (daily)

Upside: RSI appears to be flattening out just above 50.

Resistance: Bottom rail of purple channel; Tuesday's high of $51.84.

Downside: GDX penetrated the gap from mid-March around $52 without filling it, then recoiled to fill the gap from earlier this month between $47 and $48. In the process, the gold-mining ETF has broken back down from its purple channel to close just beneath its flattening 200-day MA. MACD-Histogram is showing a negative divergence. MACD may be heading for a bearish crossover.

Support: Rising 50-day MA at $46.29; recent low of $44.80; bottom of recent gap around $44.

Bottom line: The gold-mining ETF isn't displaying much vigour.

U.S. DOLLAR INDEX (daily)

Upside: The index has bounced back from the vicinity of its April lows, forming a bullish hammer candlestick on Tuesday.

Resistance: Bottom rail of green channel; falling 50-day MA, currently at 72.83.

Downside: RSI and MACD appear to be flattening out.

Support: Bottom rail of blue channel; all-time low of 70.7.

Bottom line: The dollar may retest the bottom rail of its green channel and resume its decline.