When price action penetrates support or resistance and stalls, reversal may be imminent.
At this juncture, gold and dollar, are mirror images.
Each at their own pivot point.
Gold (GLD) is attempting to push through resistance.
At the same time, it’s at the 50% retrace from the August 6th, 2020 high, and the March 8th, 2021, low.
The dollar is a near mirror image:
The correlation is not exact but has been fairly close for the past three months. Gold at a retracement high; the dollar testing support lows.
This past Friday, the dollar (UUP as proxy), did not move appreciably higher.
That in turn, has set up the ‘spring’ condition (weekly close basis), discussed the day prior in this report.
We can see the set-up.
Both gold and dollar at opposite ends.
Note, the dollar’s bullish divergence is a weekly time-frame set-up; giving it more weight.
If there’s a rally, it could go much higher, last longer or be quicker than anyone would expect.
If the dollar/gold correlation remains intact, as/if the dollar rallies, gold, silver and the miners would retreat … possibly, right along with an overall market reversal.
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