That update contains the quote below along with a link to an earlier report:
“The updates on the dollar have proposed, since the bullish divergence (now turned rally) is on a longer, weekly time frame, the ensuing move could have the potential to carry the index UUP, to the top of the trading range shown here.”
Since the June report, the dollar has rallied as expected.
At this juncture, it’s hovering just below support and in spring position … potentially building energy for another leg higher.
Today is Fibonacci Day 12, from the July 20th, high.
UUP could still post a new daily low at the next session (to get to Day 13) if the spring set-up is viable.
The dollar and gold are still inversely correlated.
If UUP rallies from here, expect a corresponding decline in gold and the gold miners.
In fact on June 9th, the day the above ‘penetration’ report was posted, gold (GLD) had already reached its peak and was in a reversal.
Five days later (before the major down-move), this report was published on gold.
Therefore, at this juncture, we’re still inversely correlated.
So, what does that mean?
The updates on the dollar have proposed, since the bullish divergence (now turned rally) is on a longer, weekly time frame, the ensuing move could have the potential to carry the index UUP, to the top of the trading range shown here.
Then, what happens to gold?
If the negative correlation remains intact, gold gets whacked.
The weekly chart of GLD (above) has the index closing right at the Fibonacci 38.2%, projected level.
Wide bars tend to get tested. There could be some kind of rally in the coming week but it’s not required.
The Fibonacci projections highlighted as the orange bars, go all the way down to 161.8%. That’s equivalent to GLD at ~ 118.65, or the futures market somewhere around $1,300 – $1,350.
With the Dow 30, (DIA) penetrating and closing below the 336, support levels on Friday, we have a Dow Theory Sell Signal (not advice, not a recommendation).
The markets appear to be rolling over.
The last market reversal in February – March, of last year, had GLD dropping over – 14.5%, in two weeks.
Fast forward to now; GLD, is already down over – 15.2%, from its August 2020, highs.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Looking at the weekly close chart, we can see the wide range.
In addition, there’s a significant bullish divergence that (technically) gives the dollar, UUP, enough energy to test the top of that range; a potential that’s completely opposite the current narrative.
A this juncture, silver, gold and the miners are still correlated.
Yesterday, a potential top and reversal in miners GDX, was identified. Today, it appears to be hovering and looking unsure of its direction.
GDX has not posted a new daily high or low as of this update.
A sustained dollar rally (along with the bond market?) would be unexpected given what seems to be apoplectic hyperinflation ranting.
Separately, in biotech, the market (IBB) has stalled to the upside in a higher than expected test. Inverse fund LABD, made a new daily low and it too, has stalled.
Downward thrust energy on LABD is dissipating.
Technical update for biotech, planned for tomorrow … market permitting.