Dollar to test all-time low

After breaching the bottom edge of its symmetrical triangle on Thursday and testing that trend line from below on Friday and Monday, the U.S. dollar index plunged practically one per cent on Tuesday to close at 74.75, just below support at around 74.8.

RSI is about to dive headlong into the oversold zone under 30, and MACD, which has made a bearish crossover, is also falling rapidly. It appears that the dollar is destined to test last-ditch support at the all-time low of 74.48.

While the dollar has declined fairly steadily since encountering resistance at about 77.0 on Feb. 7, April gold has risen in fits and starts since then. On Thursday gold gapped up to hit an intraday all-time high of $958.40 but made a spinning top -- a candlestick with a short body and long tails -- that indicated uncertainty. Gold tested the uptrend line on Monday and managed to close within the channel at $948.90 on Tuesday.

RSI has turned upward and could re-enter the overbought zone, while MACD has made a bullish crossover. If the dollar continues to fall, gold may well break out to new highs, aiming for the top of the channel at $990 and the round number of $1,000 just above. Should gold fall out of the channel, however, it could find support again at $900 and the 50-day MA just below.

Since breaking out of its trading range on Wednesday, at the same time negating the bearish divergences in both RSI and the MACD histogram, March silver has continued to rise. On Tuesday it propelled itself to an intraday high of $19 and closed not far below at $18.84, just above the green line.

RSI is at nosebleed levels close to 80, and MACD, which has made a bullish crossover, has broken above the level it reached at November's peak. Silver is fast approaching resistance at the top of the channel. A spike above it followed by a quick retreat would mean the white metal is in for a significant correction, at least to the bottom of the channel and probably to the purple line or below.

GDX hit resistance near the late-January minor peak of $52.17 on Thursday, then proceeded to test the downtrend line on Friday. On Monday the gold-mining ETF rose to encounter resistance again in the same area and closed at $52.03.

RSI is rising steadily, and MACD has made a bullish crossover. GDX is likely to continue its rally, with the next target at the all-time high of $54.23. The breached trendline should continue to provide support, with the 50-day MA and the bottom of the channel close by.

Correction over?

On Tuesday, April Gold broke out of the brief trading range from last week in the direction we did not expect, back into its blue channel, and rose further on Wednesday to close at $937.80, a new closing high. The tails on Wednesday's candlestick are rather long, indicating uncertainty.

If gold can surmount the resistance here, near the January highs, then a first target might be the top of the channel at around $970. Meanwhile, it remains to be seen whether MACD can complete the bullish crossover it seems poised to make. If it fails, gold could fall back to support at around $900.

March silver also broke back into its blue channel on Tuesday, after again testing support at the purple line, but stayed within last week's trading range. Then on Wednesday silver broke out of that range to close at $17.76, a new closing high for the bull run since August.

While MACD has made a bullish crossover, it remains at a high level, and RSI is about to re-enter the overbought zone. Silver could well rise rapidly to resistance at the green line or the top rail of the channel in the $18.50 to $19 area, but it would do so at the cost of becoming considerably overbought and hence vulnerable to a significant correction.

Should silver fall back out of the channel, it could fall through the purple line as well, before finding support near its 50-day MA, currently at $15.92 and rising.

On Tuesday, GDX gapped up on good volume to close just beneath the upper edge of its symmetrical triangle. Then on Wednesday, the gold-mining ETF broke out on stronger volume and closed at $50.95.

GDX may test the breached downtrend line before continuing what promises to be a decent rally. RSI is back above 50, and MACD has made a bullish crossover. First target is the January high at $54.23.

The U.S. dollar index was unable on Tuesday or Wednesday to close above resistance at 76.2. The index remains trapped within its narrowing symmetrical triangle. RSI is neutral at about 50, and MACD may be gearing up to make a bearish crossover, but a clear indication of the dollar's next major move will come only when it breaks out of the triangle in one direction or the other.

Gold and silver correcting

After hitting an intraday high of $931 on Monday, April gold fell back out of its channel from August on Tuesday. The bottom rail of the channel then served as resistance from Wednesday to Friday, but support was found at around $900. Gold closed the week at $906.10.

RSI and MACD continue to fall, so gold's decline may have some way to go. The 50-day MA, currently at $868.70 and rising, should provide initial support.

Gold may be in the early stages of a decline from the top of its long-term channel. Both the weekly RSI and MACD histogram are showing a bearish divergence, and RSI has fallen through 70.

March silver met resistance at the green line on Monday and Tuesday. On Friday, silver fell out of its channel from August to close at $17.12. Support was found at the purple line around $17, but the indicators suggest it will not hold.

Both RSI and the MACD histogram are showing a bearish divergence, and MACD has made another bearish crossover at a high level. The 50-day MA, currently at $15.75 and rising, should provide support.

After failing to close above $49 on Monday, GDX plunged below $47 on Tuesday. Support was found at the bottom of its (newly drawn) channel from mid-August, and the gold-mining ETF closed the week at $47.75, barely above its 50-day MA, which it has been hovering around for nearly two weeks.

RSI is neutral near 50, and the MACD histogram is rising gradually toward zero. GDX appears to be coiling close to the apex of a symmetrical triangle. If it manages to reach the upper edge, GDX could break out of the triangle. First resistance would then be around $52. If support at the lower edge of the triangle (and the bottom rail of the channel) fails, the breakdown could send GDX all the way to support at its 200-day MA, currently at about $43 and rising gently.

GDX appears to be a little less than halfway through a decline from the top of its (newly drawn) long-term channel. Both the weekly RSI and MACD histogram are showing a bearish divergence, and MACD has made a bearish crossover.

The gold-mining stocks may be poised to show some strength relative to gold. RSI has been rising from a low a little above 30, and MACD is making a bullish crossover, so it is likely that the GDX:$GOLD ratio will break out of the channel that has contained its five-week-long downtrend.

The ratio remains below both its 50-day and 200-day MAs, however, so it is possible that a breakout will lead to a trading range rather than a dramatic rally. And if gold continues to fall, a rise in the ratio need only mean that GDX will decline more slowly than the yellow metal.

The U.S. dollar index continues to coil within its symmetrical triangle. A breakout in one direction or the other should occur within a week or two.

RSI has fallen below 50, the MACD histogram is declining steadily, and MACD may be setting up for a bearish crossover. For now, the dollar seems to be headed for the lower edge of the triangle. If it falls through, next support should be at around 74.8.

A bounce, but how long will it last?

On Tuesday, April gold broke down from its blue channel and found support a little below the Fibonacci line. Gold broke back into the channel on Friday, closing at $922.30.

RSI has bounced from the vicinity of 50, and the MACD histogram is rising, so there is a good chance that gold's rally will continue for a bit longer. MACD is still at a high level, so the decline may be expected to resume in due course.

March silver fell sharply on Tuesday but found support at $16.23 on Wednesday, just 4 cents below its November high. It then rallied smartly on Thursday and Friday to close at $17.11, back in its blue channel and not far short of the previous Friday's high of $17.34.

RSI has risen strongly and is now approaching the overbought zone. The MACD histogram is rising gradually, but MACD remains at a high level, so while silver may have a little more room to rally, it could start falling again before long.

GDX fell below support at $48 on Tuesday, tested the new resistance on Wednesday, then bounced off the uptrend line joining the December and January lows on Thursday. On Friday the gold-mining ETF rose 3.59% to regain support at $48, closing at $48.54.

RSI is poised to break above 50, and the MACD histogram is rising. MACD is just below zero and has room to rise further.

GDX may be forming a symmetrical triangle and could rally to its upper edge, around $50.50. Support may be expected at the bottom edge, currently a little under $47.

The weekly chart of GDX shows bearish divergences in RSI and the MACD histogram, and MACD is poised to make a bearish crossover, so the medium-term trend is likely down.

The U.S. dollar index shot back up into the triangle on Tuesday, closing on its 50-day MA and the Fibonacci line. It rested there on Wednesday, then shot up again on Thursday. The index made an intraday high at 77.04, just shy of the medium-term downtrend line, then fell back on Friday.

RSI is back above 50, and MACD has made a bullish crossover.

The dollar could break out from the symmetrical triangle, in which case it is unlikely to be detained long by the Fibonacci resistance around 77.6. The breakout target would probably be the 200-day MA, currently just above 79 and falling. If the index fails to break out, support may be expected at 76.2 and then at the bottom edge of the triangle.

First targets reached

April gold couldn't overcome resistance at the top rail of the blue channel on Friday and closed sharply down to rest on the top rail of the green channel. The yellow metal plunged further on Monday but rebounded from a low of $896, near support at the tentative Fibonacci line, to close at $909.40, above the support offered by the bottom rail of the blue channel around $900 and back inside the green channel. The long downtail on the candlestick suggests there may be enough support below for a small trading range to form here.

However, RSI continues to fall from overbought levels and shows a bearish divergence, as does the MACD histogram. MACD has made a bearish crossover and has plenty of room to decline, so the likelihood is that gold will fall out of the blue channel before it revisits its top rail again. Support may be expected at the 50-day MA, currently at $850.29 and rising.

March silver hit a 27-year high of $17.34 on Friday but closed at $16.87, below the green uptrend line and just below the Fibonacci target of $16.95. The resulting bearish shooting star was confirmed on Monday when silver fell out of the blue channel and hit a low of $16.44 before closing at $16.78. The long downtail on Monday's candlestick suggests we're in for a bit of choppy trading, but the red line joining the November and early-January highs will probably continue to offer resistance.

RSI is falling from overbought levels and is showing a bearish divergence, as is the MACD histogram. MACD is poised to make a bearish crossover at a high level. Silver is likely to decline to support at around $15.54 or its 50-day MA, currently at $15.29 and rising. Resistance now lies at the breached uptrend lines and Friday's high.

As expected, GDX fell through recent support at $50 on Friday and declined further on Monday to close at $48.15, after briefly penetrating the Fibonacci support level at about $48.

RSI is below 50 for the first time since Christmas Eve, when GDX was at around $45, and MACD continues to decline after failing to make a bullish crossover. Support may hold for a while at around $48 or at the 50-day MA, currently at $47.48 and rising, but GDX could then fall to the next Fibonacci support level near $45. Resistance may now be offered by the broken support at $50.

On the weekly chart of GDX, both RSI and the MACD histogram are showing a bearish divergence from price, and MACD has made a bearish crossover. These indicators confirm that the trend, for now, is down.

The U.S. dollar index bounced off a low of 74.85 on Friday, near projected support at around 74.79, to close just inside the symmetrical triangle. On Monday the index fell back out of the triangle and closed at 75.35.

RSI is falling, as is MACD, but the MACD histogram is rising. If resistance at the bottom edge of the triangle holds, the dollar may resume its downward trend and take out the all-time low at 74.48. If support at around 74.79 holds, the index may mount a rally back into the triangle. Next resistance would be at the 50-day MA, currently flat at 76.15.