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April gold (StockCharts has switched from the February contract) has, as expected, encountered resistance at the top of the blue channel. Gold hit a record intraday high of $942.20 on Wednesday but closed well below that, at $926.30. On Thursday the yellow metal closed at an even $928.
RSI is falling within the overbought zone and is showing a bearish divergence -- as is MACD, which is at a level that preceded pullbacks in November and early January.
It is possible that gold will break out above the blue channel, but there is little indication of that happening any time soon. More likely is a pullback, at least to the bottom of the channel, around $900. Next support would be at the 50-day MA, which is currently approaching the $850 area.
March silver has found support at the blue and green uptrend lines and, on Thursday, peeked above the red line joining the November and early-January intraday highs, closing at an even $17.
RSI has risen into overbought territory, and MACD, while rising, is at a level close to those that preceded declines in November and early January.
It is conceivable that silver will rise to the top of its blue channel, in the $18.50-$19 range. A pullback may be more likely, possibly to the $15.50 area, where silver may find support from its rising 50-day MA.
GDX has traded in a range between roughly $50 and $52 for six days and closed on Thursday at $50.35. RSI is starting to fall, and MACD has failed to make a bullish crossover.
There is a gap beneath $50 that the gold-mining ETF could attempt to fill, and support could appear at around $48 or at the 50-day MA slightly below. Resistance would lie at the recent highs of $52.95 and $54.23.
The ostensible breakout of the GDX:$SPX ratio from its tentative green flag failed on Thursday when the ratio re-entered the channel. RSI is falling, and MACD has made a bearish crossover at a high level. The gold-mining sector has stopped leading the broader stock market, for the time being.
The U.S. dollar index cut through support at the putative uptrend line like a knife through butter on Wednesday, then tested the breakdown by kissing that line on Thursday and closing below it at 75.17.
RSI has been falling but may be flattening out, as may the MACD histogram. MACD failed to make a bullish crossover.
It would be bullish for the dollar if it succeeds in breaking back into the symmetrical triangle, in which case, resistance would be seen at the 50-day MA, currently at 76.15. Otherwise, support may be found at 74.77, November's all-time closing low, and then at the all-time intraday low of 74.48.
The past week has been one of the most volatile in recent memory, but after the dust has settled, it seems that gold, silver and precious-metals stocks have shown more resilience than the stock market as a whole. Some of the short-term charts below look healthy, while some longer-term charts are looking overbought. Caution and optimism may both be called for, depending on one's risk tolerance and time horizon.
During Tuesday's across-the-board selloff, gold found support near the November high of $848, bouncing dramatically from its intraday low of $849.50 to close within the blue channel from August and up for the day. On Wednesday gold found support at the bottom rail of the blue channel, and on Thursday it closed at the top of the green channel from November. On Friday, it broke through and closed just above the top of the green channel. The top of the blue channel, currently a little above $930, beckons, although Friday's longish uptail is potentially a sign of weakness.
RSI has just re-entered its overbought zone, but MACD is in the process of making a bullish crossover -- although at high levels, so the potential for significant gains in the near future may be limited.
On the long-term chart, gold is fast approaching the top of the channel from mid-2005. The target again lies currently a little above $930. RSI remains in overbought territory, having just bounced up from around 70, but is making a bearish divergence as it is at a lower level than its peak at gold's November high. MACD is in nosebleed territory, having exceeded its level at gold's May 2006 high, but the MACD histogram is also making a bearish divergence.
Silver bounced from an intraday low of $15.26, comfortably above its 50-day MA at around $15, to close on Tuesday at its green uptrend line. That support gave way on Wednesday, but silver worked its way upward on Thursday and closed on Friday above the green line and at resistance offered by the bottom rail of the blue channel from August. Silver opened and closed at $16.49 on Friday, making a true doji, a candlestick that signifies a standoff between bulls and bears and indicates exhaustion after a strong advance.
RSI is close to overbought, and MACD has flattened out at a high level. Silver is looking toppy. If it re-enters the blue channel, it may have a little room to rise before reaching its projected Fibonacci target just under $17. Otherwise there is some support at $15.26 and then at the 50-day MA, currently at $15.02.
On the long-term chart, silver is looking reasonably healthy, having bounced off support near the uptrend line from August 2005. Although RSI is not yet in the overbought zone, it is at levels that have preceded sharp pullbacks in the past 15 months, so some caution is warranted. While MACD is rising, the MACD histogram could be making a bearish divergence.
GDX gapped down sharply on Tuesday but bounced near support at the Fibonacci 38.2% retracement level around $45 and closed up for the day. The gold-mining ETF managed to close above support at the Fibonacci 23.6% level around $48 on Wednesday. It rose sharply on Thursday but made a marginal gain of 0.14% on Friday, closing at $50.42, up seven cents. Friday's candlestick had a longish uptail, a sign of potential weakness.
RSI has bounced from 50, but MACD, while flattening out, looks as though it has room to fall. GDX may trade in a range for a while. Resistance is likely at the recent high of $54.23, and support may be found at the Fibonacci levels mentioned.
On the long-term chart, GDX seems to have made another successful test of the top of the blue channel from which it broke out in August. RSI and MACD are showing signs of a bearish divergence, however. Volume, which picked up in late July, has surged with the volatility since the beginning of the year. The high volume needs to be accompanied by further price rises if it is not to be seen as a sign of distribution of the stock.
The GDX:$GOLD ratio gapped sharply down on Tuesday, tested the top of the broken falling wedge, then bounced just as sharply higher. On Friday, however, it closed below Tuesday's close, having encountered resistance at its falling 50-day MA, which is below the essentially flat 200-day MA. The long uptail on Friday's candlestick shows potential weakness in the ratio.
RSI seems stuck below 50, and MACD is below zero and falling. It looks as though the gold miners will continue to underperform the metal itself for the time being.
The gold-mining ETF is looking pretty solid relative to stocks in the broader market, however, as shown in the bottom panel of the chart.
The GDX:$SPX ratio broke out sharply from an eight-week flag at the beginning of this year and seems to have broken out of a two-week flag on Friday. The long uptail on Friday's candlestick is a sign of potential weakness, however, and there is a risk that the ratio will form a double top instead.
RSI appears to be making a bearish divergence, and MACD is flattening out at a high level. It's possible that further upside in the ratio may be limited in the near future.
The steady rise in average relative volume since August, seen on the long-term chart, may indicate gold-mining stocks have begun to be perceived as a safe haven from the even more volatile broader stock market. RSI is at the boundary of the overbought zone, however, and MACD is at extreme levels, with the MACD histogram threatening to make a bearish divergence. Some reversion to the mean of historical relative performance may not be too far off in the future.
On Tuesday the U.S. dollar index hit an intraday high of 77.35, a little below the thick blue trend line, and closed just above its 50-day MA at around 76.20. That support failed on Thursday. The index rose on Friday together with gold, a fairly uncommon occurrence.
RSI remains mired below 50, but MACD is flattening out below zero.
The U.S. dollar may be forming a symmetrical triangle, in which case the index may be expected to fall to the thin blue line forming the triangle's lower edge, currently around 75.4, and bounce from there. Next support would be at the recent low of 75.2. Final support is at the all-time low of 74.48. The thick blue line may be expected to offer ongoing resistance.
A glance at the long-term chart lays to rest the notion that the rise of gold is solely a function of the decline of the U.S. dollar.
RSI has begun to turn down, but MACD is still rising, although the MACD histogram has flattened out.
The dollar could rally to its falling 50-week MA, currently just under 80 -- where the index would run into resistance at the top of the broken falling wedge as well -- without breaking its secular downtrend.
February gold found support at the bottom rail of the blue channel, around $880, on Wednesday, Thursday and Friday. As a result, RSI has flattened out, but MACD is poised to make a bearish crossover, so the short-term trend remains down. First support is at the November high of $848.
March silver found support at its green uptrend line, closing on Friday at $16.22, just 5 cents shy of its November high and just beneath the bottom rail of the broken blue channel from August. As a result, RSI has turned upward and the MACD histogram is falling less steeply. Support lies initially at $15.54 and then at the 50-day MA, currently at $14.95. Resistance lies first at the recent high of $16.72 and then at the projected Fibonacci line around $16.94.
GDX found support near the Fibonacci 23.6% retracement level of $48.06. The gold-mining ETF closed on Friday a little above that mark after penetrating the 50-day MA intraday. It formed a hammer-like candlestick, which often heralds a bullish reversal. RSI appears to be bouncing at 50, but MACD has made a bearish crossover, so the immediate outlook is unclear.
The U.S. dollar index met resistance at around 76.5, near the previous week's high. RSI is hovering around 50, but MACD is threatening to make a bullish crossover, so the index may extend its rally. Next resistance is at the downward-sloping blue line, currently around 77.5. Support lies at the 50-day MA, currently at 76.16, and then at the recent low of 75.20.
February gold was held back on Monday and Tuesday by the top rail of the old blue channel from mid-August. It closed both days at the top of the new green channel, forming spinning tops -- long-tailed candlesticks that potentially signify a change in trend. The intraday highs were practically identical ($915.90 and $916.10 respectively), so for all intents and purposes, the pair of candlesticks can be taken together as a bearish tweezer-top formation, similar to the one in early November that triggered the recent consolidation.
RSI is flattening out in overbought territory, MACD is at levels last seen at the November top, and the MACD histogram has begun to decline. It is likely that gold is at or near a short- to intermediate-term top.
March silver made an intraday high on Monday of $16.72, not far short of the projected Fibonacci target at $16.94. On Tuesday, silver came to rest on the broken uptrend line that it regained just last week, closing at $16.30, a mere three cents above its November high. Long-tailed candlesticks were formed both days, signifying uncertainty and a potential change in trend. A decline from here would create a bearish double top.
RSI is falling within overbought territory, MACD is close to levels last seen at the November top, and the MACD histogram has begun to decline.
On Monday, GDX gapped up on strong volume above its November high but closed near the low of the day. On Tuesday, the gold-mining ETF fell back through the old high, again on strong volume, to close down 3.96%. In the process, GDX formed a long bearish candlestick and a double top.
RSI has been repelled at 70, MACD is at levels seen at the September and November highs, and the MACD histogram has begun to decline.
Since GDX tends to lead gold, Tuesday's action in GDX is ominous for the yellow metal. At one fell swoop, the GDX:$GOLD ratio penetrated both its 200-day and 50-day moving averages to the downside. RSI has fallen below 50, and the MACD histogram is declining rapidly.
Meanwhile, the U.S. dollar index has made a bullish hammer, a type of candlestick that has in the past two months preceded rallies of varying duration. First resistance is at the 50-day MA, currently at 76.16. Next resistance is at last week's high, around 76.5. Support is at around 74.8 and then at 74.48, the index's all-time low.
Records fell like bowling pins this week as February gold beat an uncharted path to a new high of $893.60 on Thursday, negating the potentially bearish shooting-star-like candlestick it made on Wednesday.
While gold appears to have hit the top of what may be a new, less steeply sloped channel (dotted green line), the yellow metal may have sufficient momentum to break through $900 and reach the top rail of the old blue channel from last August before pausing to relieve the overbought condition indicated by RSI.
The weekly chart of gold shows a potential blue channel with a top rail currently a little above $930.
Like gold, on Wednesday silver formed a candlestick resembling a potentially bearish shooting star, the high of the day matching the previous high of $16.27 on Nov. 7 to the cent. Proving that this was no coincidence, silver ignored the bearish omen and closed at $16.27 on Thursday.
Will silver form a bearish double top at this dotted red line in the sand, or will it reach the projected Fibonacci target of around $16.94? While in overbought territory, RSI is rising, as is the MACD histogram, so the short-term outlook is neutral to bullish.
Towards the end of a choppy week of trading on strong volume, GDX managed to close just above $52 on Thursday, less than a dollar short of its all-time intraday high (adjusted for dividends) of $52.95, made on Nov. 7. RSI is approaching overbought levels, and the MACD histogram is flat, so the possibility of a double top being made near that price is a real one.
The U.S. dollar index attempted to break through resistance at its 50-day MA on Wednesday but was pushed back down on Thursday. RSI was repelled at 50, and the MACD histogram appears to be turning back down, so this week's brief rally in the dollar could be over.
March silver seems to have stalled in the region of the prior closing high on Nov. 9 at $15.55 and the putative Fibonacci 23.6% line at $15.54. It managed to make highs on Thursday and Friday of $15.53 and $15.57 respectively but closed on a doji, which spells uncertainty, at $15.46 on Friday.
RSI is flattening out (at close to overbought levels in the vicinity of 70), as is the MACD histogram. If silver pulls back here, it should find support first at $15 and then at the Fibonacci line at $14.70.
On the weekly chart, silver has managed to climb back above the broken uptrend line from August 2005, a bullish sign for the longer term.
Meanwhile, gold also closed with a doji on Friday, a little above its retaken uptrend line. RSI is declining within the overbought zone, and the MACD histogram has flattened out, so the yellow metal may take a breather here. If gold falls back out of the channel, support may be expected at the previous high of $848.
GDX, too, looks ready for a respite from its run toward $52.95, gapping down on Friday to close at $49.90. RSI has turned down from the high 60s, and the MACD histogram may be flattening out. The Fibonacci 23.6% retracement level could provide support near $48; next support would be at the 50-day MA, currently at $46.62.
The U.S. dollar index formed a hammer-like candlestick with a long lower tail on Friday, which could presage a hiatus in its decline. RSI and the MACD histogram may be flattening out here. Resistance would be likely at the old neckline around 76.2, with the 50-day MA a little way above. Next support would be at the recent closing low, near 74.8.
Gold just failed to break its November high of $848 on Monday, reaching $847.40 before closing down at $838, its first-ever monthly close above $800. When trading reopened on Wednesday, February gold sliced through the resistance at $848 to close up $22 at $860, just above the bottom rail of the old channel that started in mid-August.
Spot gold closed above $850 for the first time in history.
RSI has entered the overbought zone, and resistance could still materialize here at the broken uptrend line. It would not be surprising if gold were to consolidate briefly above the old high before heading for the upper rail of the channel. Along the way, the yellow metal may pause to pay its respects to the all-time high in the futures at $887.50.
Silver was held back on the last two trading days of 2007 by resistance around $15 but smashed through it on Wednesday to close at $15.29, up 2.48% -- just short of gold's 2.63% rise. Fibonacci resistance lies around $15.54, near the November closing high, and the broken uptrend line is a little way beyond that.
GDX paused at its 50-day MA on Monday, then leapt 7.44% on strong volume on Wednesday to close at $49.24, near its highs of the day and well above the Fibonacci 23.6% retracement line at $48.06. The $48 area could provide support if the gold-mining ETF pauses here to digest its gains before making a run for the November high at $52.95. RSI has some room to go before it reaches the overbought zone.
Relative to the S&P 500 index, however, GDX is approaching overbought levels, as measured by the RSI of the GDX:$SPX ratio, after the ratio made a dramatic breakout from its flag on Wednesday.
The U.S. dollar index's brief bounce on Monday at its 50-day MA was followed by a drop on Wednesday that put it back below that moving average and the neckline of the little inverse head and shoulders that sparked the recent rally. RSI is falling after being repulsed at 50, and MACD has made a bearish crossover.
April gold (StockCharts has switched from the February contract) has, as expected, encountered resistance at the top of the blue channel. Gold hit a record intraday high of $942.20 on Wednesday but closed well below that, at $926.30. On Thursday the yellow metal closed at an even $928.
March silver has found support at the blue and green uptrend lines and, on Thursday, peeked above the red line joining the November and early-January intraday highs, closing at an even $17.
GDX has traded in a range between roughly $50 and $52 for six days and closed on Thursday at $50.35. RSI is starting to fall, and MACD has failed to make a bullish crossover.
The ostensible breakout of the GDX:$SPX ratio from its tentative green flag failed on Thursday when the ratio re-entered the channel. RSI is falling, and MACD has made a bearish crossover at a high level. The gold-mining sector has stopped leading the broader stock market, for the time being.
The U.S. dollar index cut through support at the putative uptrend line like a knife through butter on Wednesday, then tested the breakdown by kissing that line on Thursday and closing below it at 75.17.
