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The dollar continues to break down decisively through several support levels, and gold is getting a bid.  There are many reasons for the current USD bear trend vs. bullishness on gold, fundamentally and geopolitically.  But we’re not venturing into that deep rabbit hole here.  Before we discuss the current chart technicals on both, please revisit 2 recent articles I’ve written that include charts.  Here are the links, with excerpts.

From May 16, 2017

USD Dollar Breaking Down Through Three Year Trendline Support – Will It Plunge And Spike Gold & Silver?… “On the weekly chart above, take note of that lower trendline going back to May of 2014 when the USD began a rally to its recent highs.  That’s where we have a potential plunge brewing following this mornings breach.  Notice 2 weeks ago, the 50 EMA Exponential Moving Average was temporarily breached to the downside, and so far this week we’re back under it, as well as falling through that lower trendline.  The Fibonacci levels drawn from the $78.90 Low to the recent $103.82 High, price is now nearing the 23.6% at $97.94.  If that Fibonacci level is taken out to the downside decisively, expect a visit to the 38.2% at $94.30.  And lastly, the DMI-ADX Alligator Tongue is primed for the negative.” 

From June 18, 2017

USD Choppy on Economic Data After Breakdown – Gold, Silver, and Mining Stock Chart Analysis… “This past week, the USD put in a lower low of $96.32, just below the 61.8% Fibonacci of $96.46, and closed at $97.14, a lower close than the previous week.  Overall, the price ended in a higher high and a lower low than last week’s price range.  There is a well-defined downtrend channel from the January high of $103.83 down to the low.  The studies are all still negative, with the 100 EMA offering support along the 61.8% Fibonacci.  If the price breaks down decisively again as it did through the 50 EMA and trendline drawn from the May 2014 low, we’re looking at the $94.50 to $95 range at the 78.6% Fibonacci level.  Gold and Silver, along with the miners, will rally if the USD dumps that far near-term.  We’re also entering a seasonal low period for the metals that spans from the end of June to mid-July.  The window for a potential move in the metals is just ahead, but caution is warranted for lower price points before a pivot upward.”

And CNBC’s take on the dollar today was bearish… Bottom falling out of US dollar: Drops to near 2-year low vs the euro, 2017 loss now 10%.

Here is my USD weekly chart from this afternoon…

The dollar had its expected visit to the 38.2% Fibonacci at $94.30, while printing a low today of $93.85.  Ever since the price broke down through the 50 Exponential Moving Average (EMA) back in April, it continued in a strong downtrend, with one pit stop at the 100 EMA for 5 long, choppy weeks.  This week and last, the price continued down to and through the 150 EMA, and today, there is a breach of the 2012 trendline. The 200 EMA sits at $93.73, and today’s low was just a stone’s throw away.  If the 200 EMA is decisively taken out, the next bullseye sits just below the May 2016 low at the 50% Fibonacci level of $91.36, or a bit lower at the bottom trendline of the Megaphone pattern.  The most bearish indicator on the chart is the DMI-ADX Alligator Tongue set-up, and it does not appear to be rolling over at all, but gaining in negative strength of trend. The StochRSI & MACD also say we’re going lower. There is nothing bullish in the chart for the near-term.  It is possible that the price will continue down into the high 80s this upcoming fall, so buckle up!

On to gold…

Gold’s Seasonality: Time to Get Positioned Ahead of Strongest Months… “Despite the recent weakness, the price of gold is still up 9% year to date and may be poised for a strong second half of 2017” Hard Assets,  June 2017

 

Analysis of gold: BULLISH, if no exogenous event interrupts near-term.  See the annotations on my daily chart from this afternoon…

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