U.S. Dollar and Gold Trends into 2010
Commodities / Gold & Silver 2009 Dec 29, 2009 - 03:39 PM GMT
The dollar finally broke through resistance at 23, which has turned into support. Price is backing up and testing support.
The CCI index at the bottom of the chart has gone from overbought (+200) to 89. When an asset moves from being this overbought to back below 100, it often signals a consolidation/correction is likely.
The Fibonacci levels overlaid on the chart are possible targets. The open gap looks like it may be filled. A short term overbought pullback in the dollar, if it were to occur, would give gold a breather.
As reported last week, some commodities have been harder hit than others: gold and oil receiving the short end of the stick. This week, however, oil spiked up almost 5%, while gold stabilized. The daily USO (oil) chart shows a positive MACD crossover with the histograms turning up into positive territory as well.
However, it remains to be seen if price keeps advancing, and if so, how far. Upper trend line support and the 50 dma at 39 offer significant resistance.
Gold
Gold was down slightly on the week, but its recent fall at least stabilized for the time being. The daily chart shows gold bouncing off support near 1075.00. Notice that price is still below its 50 dma (1114). Resistance resides above near 1125.00.
The CCI indicator at the bottom of the chart has moved from oversold back across -100, which sometimes signals a bounce back rally. Much will likely depend on the dollar’s action. RSI remains below 50 and will have to move higher if any rally is to be sustained.
Gold stocks (GDX) gained 1.73% for the week, outperforming the physical metal. Some of the individual stocks were up 3-5% (the stronger chart patterns from last week’s stock watch list). The question is whether this was an oversold bounce; or the start of something more.
The chart shows that support held and that resistance lies directly ahead. Notice the band of overhead supply that goes back to Oct. – Nov. CCI has moved from oversold back towards zero (-51); and ROC is near the zero line. A lower high was made, although it was outside the rising price channel, which has since been regained. The weight of the evidence remains neutral.
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Douglas V. Gnazzo
Honest Money Gold & Silver Report
About the author: Douglas V. Gnazzo writes for numerous websites and his work appears both here and abroad. Mr. Gnazzo is a listed scholar for the Foundation for the Advancement of Monetary Education (FAME).
Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.
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