I’m diving right into the charts today, as there is a lot to cover. To view a larger version of any chart in this article, right-click on it and choose “view image.” First, we’ll look at the bigger picture by revisiting the gold monthly chart technical analysis and notes published on Dec. 31, 2017…
“I see nothing bearish about this chart. Gold remains in an accumulation phase, with higher lows before it takes a crack at reasserting the secular bull that began in 1999. $1,380 is the number to watch, as it is a potential neckline of an Inverse Head and Shoulders to destroy with a decisive move, and there sits a confluence of resistance.”
Gold weekly chart and notes published on Dec. 31, 2017…
“The gold price began its pivot and subsequent rally on Wednesday, Dec. 13th, following Yellen’s .25% interest rate hike and transitory Fed-speak nonsense. The price quickly and decisively breached back above the 50/200 Exponential Moving Average (EMA) Golden Cross and pierced the Falling Wedge topside trendline, flipping the trend back to bullish. Remember, the last time gold had a definitive Golden Cross on the weekly chart was at the turn of the century, marking gold’s secular bull run. Any cash on the sidelines is watching it very closely. The next resistance levels are the 78.6% Fibonacci and overhead 300 Simple Moving Average (SMA) that are sitting at $1,321, then $1,357 from the Sept. 2017 high is next before the magic number of $1,380. The StochRSI is stoked, and the DMI-ADX has crossed back over into the positive, but the ADX has not yet risen from the underside to form an Alligator Tongue to confirm an exceptional longer-term momentum rally. You can see how powerful the DMI-ADX is on the daily chart below compared to the weekly above. I suspect we will see the price consolidating along the way before $1,380 can be challenged. Volumes are strong, but they did taper slightly during this holiday week.”
Gold weekly close as of today, Jan. 12, 2018…
The Falling Wedge drawn down from the September high is now history. A Cup and Handle pattern has taken shape, which envelopes the entire right shoulder of the bullish, long-term Inverse Head and Shoulders pattern drawn from 2013. An important price level taken out this week that clears the way to complete the Cup and Handle is the confluence of a Fibonacci level and 300 SMA at $1,321. The next near-term targets and resistance are the September high at $1,357, then $1,380, which is the Inverse Head and Shoulders neckline. The studies are lining up positively as we approach those numbers. The Golden Cross is now firm, while their respective lines are spreading apart and rising. The DMI-ADX continues to draw closer to an Alligator Tongue momentum launch. The StochRSI is a little toppy, but it can remain there for an extended period. The volumes are rising along with the price. This weekly chart is Bullish across the board. Expect another short-term breather in the price action to occur soon. Gold printed a high of $1,339.36 today and closed at $1,337.73 for the week.
Gold daily chart and notes published on Dec. 31, 2017…
“The most important bullish indicator on the daily chart, despite a few close encounters along the way, is the 50/200 EMA Golden Cross. It has not broken down since crossing over in April 2017. Second is the bullish Alligator Tongue set-up on the positive DMI-ADX since the price pierced the Falling Wedge and is indicative of powerful momentum. What more could you ask for in a healthy chart, despite interest rate hikes and delusions of QT from the Fed? A Greenspan Put? There is nothing bearish about this chart. Take note that the $75 price action off the December pivot has not had a breather. The StochRSI is a bit stretched to an extended top, and we are crossing into the New Year. So, as noted on the weekly, I expect some chop and consolidation soon so that a bullish uptrend can continue onward. Slow and steady she goes.”
Gold daily close as of today, Jan. 12, 2018…
As noted on the Dec. 31st chart, I expected a breather in the price action soon, and we had one. Given the momentum and strength of the run since December, a longer consolidation and chop were more likely than what transpired. The initial run up formed a Flagpole and Pennant that flagged out for only 5 brief days. The threat from China to no longer purchase our debt turned out to be a non-event, and any price action as a result was contained within the Pennant. On Thursday, the price peeked its head out from the topside trendline of the Pennant near the close following a few choice headlines regarding an alleged racist tone from the POTUS, which originated from within a bipartisan immigration meeting at the Oval Office. Today, Friday, the price busted out with conviction following the alleged “shithole” comment, and a debacle ensued between the media and bipartisan leakers and whiners, which fed a negative frenzy against the POTUS and did not look good to the rest of the world. Keep in mind that the U.S. debt ceiling bill is due on Jan. 19, and the shithole distraction does not bode well for an already divided political atmosphere, which raises concerns about a potential government shutdown threat as revenge against the POTUS for his candid loose lips.
Gold loved it. At one point, the StochRSI appeared to be rolling over on Tuesday and Wednesday, which telegraphed a potentially longer period of chop. As you can see by today’s bullish candlestick, the price action pulled the StochRSI back to positive and extended the DMI-ADX momentum. The ADX is not overbought yet, while sitting at 62, but it is getting close to 80, which is the level to watch for a pullback signal. The price could run up to the $1,357 September high because there is not much resistance between here and there, and potentially get close to $1,380, then take a time-out to consolidate and make a run for $1,380 magic. Note that China’s announcement to launch their Petroyuan trading platform could happen any day now. As with the weekly chart, the daily remains Bullish across the board, short of any negative news over the weekend or next week that can blunt the run.
The recent price action since December has been spectacular, but not unexpected or unprecedented. No matter what the Fed decided to do at the December FOMC meeting regarding interest rates, a pivot in price to the upside was baked in the cake, so to speak. We have not seen this kind of daily strength in the charts since early 2016, and 2010 through 2011 which led up to the most recent all-time high of $1,920.74 in September of 2011.
Despite what you may have read or heard via the mainstream media, there was NO 11 or 12 consecutive day record run in the price of gold. Gold’s spot price, as you can see on the above gold spot chart, had 6 consecutive days of higher highs, 1 day as a breather, then 6 more days of higher highs. The GLD ETF had a run of 10 consecutive days, as you can see on the chart I posted on my Twitter account…
Most importantly, take note of how different the candlestick appearances on the gold spot chart vs. GLD chart. Remember, GLD is a derivative of gold spot and does not trade 24/7. GLD charts are missing a boatload of price action data that takes place after hours and overnight, then show as gap-ups and other nonsense when it opens on the NYSE. The gold spot price gives you a heads-up for trading GLD paper. GLD does not influence the price of gold, as it is a derivative that conforms to what gold is doing everywhere else. GLD should not be used to make trading decisions, either. If you place the live feed of both charts side-by-side and you have a good broadband connection, you can see how GLD lags in price action to the gold spot price. You can make real-time trading decisions based on the gold spot chart and only use the GLD order entry window on your trading platform, without even looking at the GLD chart. I’m not kidding; it works.
Here is the USD daily chart and notes published on Dec. 31, 2017…
“The daily chart drives home the point of how bearish the dollar looks. The DMI-ADX is in the negative and has a strong Alligator Tongue set-up, indicative of a momentum move to the downside. Note the little black arrow comparison to July-August of 2017 on the DMI-ADX study. The StochRSI has bottomed out, but the price could have a decent plunge before any bounce occurs while the RSI searches for a floor. The 200/50 EMA Death Cross that occurred in June 2017 continues, with all moving averages back above the current price action following the Dead Cat Bounce, which is very bearish.”
USD weekly close as of today, Jan. 12, 2018…
The lower trendline has been tapped again, following a “three taps and you’re out” situation. Momentum has continued to the downside. If the lower trendline is breached this time, a visit to that dotted lateral line (with an $89 handle) or down to the next Fibonacci (at $88.42) is in the cards. The DMI-ADX is now in a negative momentum Alligator Tongue mode, as it was back in June of 2017. The StochRSI has collapsed to zero and could bounce around down there for a while if the past is any indication. There will be no bullish signal on the StochRSI until it crosses back to positive territory, as it did during the beginning of that Dead Cat Bounce that started in September of 2017. It’s Bearish across the board, and that is positive for gold, silver, and the mining stocks.
On to the mining stocks.
GDX weekly close as of today, Jan. 12, 2018…
The price has breached the topside trendline drawn down from 2011 this week, closing at $24.01 today. Near-term targets are the topside trendline of the Ascending Triangle, and the overhead 300 SMA at $26 and change. The next resistance is $24.35, at the overhead 200 EMA. The DMI-ADX looks a bit sloppy, and the StochRSI is positive, but toppy. On the positive side, volumes have been rising for 3 weeks alongside the price. I am Neutral here until the 200 EMA is breached decisively, despite the bullish feeling this week’s Hammer Candle gives, and the DMI-ADX must take on a more bullish appearance, which would indicate that a takeout of the Ascending Triangle and 300 SMA is imminent.
GDXJ weekly close as of today, Jan. 12, 2018…
The price has breached the topside trendline drawn down from January 2017, closing at $34.94 today. This week’s closing candle is a hammer, the same as the GDX. Those candles are generally bullish, but other studies are causing me to pause. I have to stand Neutral here until the DMI-ADX improves in appearance, and I do not like the StochRSI looking toppy when other studies aren’t 100% in your favor. I do like that the volumes have risen slightly with price. If the overhead 150 EMA is challenged with decisive volumes, I would flip to bullish, as a $4 run to the overhead 200 EMA could occur quickly.
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The follow-up royal flush of four mining stocks that were posted for consideration on December 21st.
“In addition, after going over a couple hundred mining stocks, I added a few choice individual charts that are leading the pack from a technical point of view. My primary filter is high volume to ensure tradable liquidity on a daily basis for scalps and swings, then all subsequent studies can be considered.”
Freeport-McMoRan – FCX weekly chart…
“FCX has consistently put in higher lows since December 2015, and the topside trendline of an Ascending Triangle since December of 2016 has been breached for the last two weeks. The price is currently sitting just above the 200 EMA by fifty cents. There is not much resistance to the price on the upside. The DMI-ADX is positive, and the StochRSI is showing strength. This chart could use a nice bump in volume to assist in a decisive takeout of the 200 EMA so that the price can move along without hindrance. A near-term target is $22.”
On Dec. 20th, FCX closed at $17.66. Today, Jan. 12th, it closed at $19.75, with a weekly high of $20.07 – a 14% gain.
BHP Billiton weekly chart…
“BHP looks similar to VALE and FCX, except there is no Ascending Triangle, but rather a short-term lateral trendline with a high of $44.62 to conquer from September of 2017. The price has taken out the 200 EMA and must decisively take out the lateral for it to continue forward. The DMI-ADX is setting up with positive momentum, and the StochRSI is upper-bound, with a history of remaining on the high side during extended price moves. Volume could use a kick, but the accumulation phase that took place immediately after 2015 came with solid buying volumes that put in a good base. A near-term target is the low $50s.”
On Dec. 20th, BHP closed at $44.14. Today, Jan. 12th, it closed at $50.69, with a weekly high of $50.79 – a 15% gain.
VALE weekly chart…
“VALE has a very similar look to FCX. One significant difference is that volumes remained stable, even during its capitulation phase in the second half of 2015. It has had a steady overall price movement, without substantial swings, and it has consistently put in higher lows since December of 2015. All of the EMAs have been left behind, and the 50/200 EMAs are about to make a bullish Golden Cross, as the price is challenging the Ascending Triangle’s topside trendline. That topside trendline is also the rimline of a bullish Cup and Handle. The DMI-ADX is positive, and the StochRSI is strong. A near-term target is $15.”
On Dec. 20th, VALE closed at $11.87. Today, Jan. 12th, it closed at $13.53, with a weekly high of $13.57 – a 14% gain.
Fortuna Silver Mines – FSM weekly chart
“FSM has decisively taken out the topside trendline drawn back to August 2016, as well as all the overhead EMAs. The DMI-ADX has formed a classic Alligator Tongue set-up, which is very positive for momentum in the near-term. The StochRSI is also showing strength, having reached its upper bound range, but could continue for an extended period of time, as it has done so in the past. The volumes are looking good compared to 2015, and selling volumes look to have tapered off in capitulation while higher buying volumes are settling in.”
On Dec. 20th, FSM closed at $5.21. Today, Jan. 12th, it closed at $5.27, with a weekly high of $5.31 – a 2% gain. They were flat returns, but the studies are strong and there is potential for a much larger gain if the current lateral Fibonacci resistance is taken out decisively with volume.
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