Dollar corrects

The U.S. dollar index has finally halted its headlong rise to extremely overbought levels, losing more than a point on Friday. Conversely, gold and silver have started to turn upward, led by GDX, the gold-mining ETF.

U.S. DOLLAR INDEX (daily)

Upside: After falling 1.24 on Friday, the index could bounce briefly before resuming its decline.

Resistance: Thursday's high at 80.38.

Downside: A correction to the dollar's steep ascent is under way. RSI is showing a bearish divergence and has fallen out of the overbought zone. MACD-Histogram is also showing a bearish divergence. MACD looks poised to make a bearish crossover.

Support: Gap and congestion area below 77.5; upper rail of green channel; 50-day MA.

Bottom line: The dollar index has a long way to fall before any support appears.

GOLD (daily)

Upside: RSI is bouncing out of its oversold zone and is showing a bullish divergence.

Resistance: Bottom rail of blue channel; round number at $800.

Downside: MACD has made a bearish crossover.

Support: Thursday's low at $739.80.

Bottom line: Gold is likely to encounter stiff resistance at the bottom rail of the blue channel, which formerly provided strong support.

SILVER (daily)

Upside: RSI is turning upward from severely oversold levels.

Resistance: Earlier low at $12.31.

Downside: MACD has made a bearish crossover.

Support: Tuesday's low around $13; this month's low at $12.31.

Bottom line: Silver, which tends to lead gold when the market reaches extremes, is struggling to recover from its lowest levels in two years.

GDX (daily)

Upside: GDX gapped up convincingly on strong volume on Friday. RSI has risen out of the oversold zone and is showing a bullish divergence, as is MACD-Histogram.

Resistance: Bottom rail of blue channel.

Downside: No clear indication.

Support: Thursday's low at $27.35.

Bottom line: GDX has probably made a bottom, although it may conceivably return to test it. It would be a bullish sign if the putative runaway gap around $29 is tested but not closed.