The Dollar's Demise and Gold's Resurrection

The Dollar Consolidates while the Markets recover.

US Dollar Daily Chart

Chart is courtesy of marketclub.
Marketclub - US Dollar Trend Analysis (What's this?)

Here is a short follow up on my most recent article 'US Dollar Extends Gains' written on December the 22nd. In that article I summarized the following :

To summarize, short term, yes we are in an UP trend, the chart confirms that. However, RSI has reached overbought. MACD is trending higher but with choppy performance. We are trading farther and farther away from the 30 and 50 MA so a consolidation is getting more and more likely to happen from here.

Mr. market was soon to follow this advice cause December 23 was the start of the consolidation/correction for the dollar after extending its gains from a low of 74.356 on December 2 to a high of 78.449 on December the 22nd.

Moving Averages

10 MA : 77.784
30 MA : 76.349
50 MA : 75.916

As of writing the dollar is trading at 77.388 and is thus already trading below the 10 MA. December 27 saw us crossing below the rising trend line indicating that the steam is out of this kettle for sure!

Looking at the chart and all indicators I reckon looking up from here is wishful for those who are long dollar but not very realistic. Down is where I would look. Short term and long term. Market manipulation excluded then cause I am no match for that.

I say manipulation because if you have a look at the charts from Early December and in particular December the 2nd. The dollar starts to rise and right at that time gold starts to drops. Now, OK, I can understand all the dollar/gold relation and safe haven and such...

...but what I do not get is why even after having such a crisis, after knowing what the dollar is worth now or actually ISN'T worth after the stimulus packages, TARP, FED printing presses, Bank bailouts, Company bailouts,...investors are still buying dollars. So...who are these very first buyers driving up the price and starting this Christmas rally in the dollar?

This is no rally based on valid fundamentals. NO Sirree!

So, let me see if I understand Mr. Market? Ok?

So, December 2, gold breaks down and the dollar rallies or vice versa, the dollar rallies and gold breaks down. So, later we get word from the European mainland that Greece, Spain and Ireland are in deep...um...horse manure? Is that the right noun to use? Up to their arm pits in the proverbial debt-pit.

So, because the Euro takes a beating, the dollar who for months has had the leading role in our documentary as being the biggest decliner now steps aside and lets the euro play leading role for a while?

Hm? What does not sound right in this motion picture?

This sounds to me like too much artistic freedom on behalf of the director of this documentary. My original remarks remain, unless the dollar succeeds to AND close above 80.00 and STAY above 80.00 the dollar is in my books at least very much in a downward trend.

US Dollar Weekly Chart

Chart is courtesy of marketclub.
Marketclub - US Dollar Trend Analysis (What's this?)

Weekly then, well this hasn't improved much. I'm still not swayed, not even by the rally we had since the start of December. It is still too insignificant a move to even be treated as such. For me, I would stay far far far away from any long positions in the dollar for the moment.

From the MACD indicator we can see this is still clearly trending below the center line and thus still bearish as indicator. Histogram is also declining.

The ADX or Average Directional Indicator is in some sort of limbo on the weekly chart? Don't know if this is a chart bug or if the -DI and the +DI just happen to run parallel for the last couple of days.

Maybe it is forming a wishing rod and hoping then to break it in the right place and have their wish come true? Who knows?
Maybe even a dowsing rod? Searching for water? No,..must be an oil dowsing rod then.

Anyway, until this market takes direction again ADX is probably not a good indicator here on the weekly besides than the fact that we see that there is some sort of sideways action to expect perhaps.

Long term like I said, until we clearly break above 80.00 I consider the trend which was downwards still very much intact. Despite the short rally.

I don't know how many more lessons Mr.Market needs but sooner or later this dollar/gold relation will be gone and out the door for GOOD!

YeOldGoldNugget's links of interest

• New Video: As the Dow Goes, So Goes the Country
• New Video: Has the dollar bottomed out?
• New Video: Crude Oil: Lower Levels Ahead?
• New Video: It’s Official Silly Season for Gold
• What do supertraders have in common
• Two Major Forces Collide in the Index Markets
• What’s Gold’s Next Stop?
• Introducing the Perfect Portfolio
• Free Email Trading Course Copy

Orko Silver's Strong Performance

Orko Silver still going strong.

Orko Silver Daily Chart

Chart is courtesy of marketclub.
Marketclub - Orko Silver Corp. Trend Analysis  (What's this?)

Well, not much has changed since I wrote up my last chart. Not for Orko Silver anyway which is still going strong despite a correcting gold and silver market. Just goes to show how a stock gets a reputation of being a strong performer. That title in my book at least is also bestowed on stocks that can witter any storm.

Just compare Orko Silver to most other stocks. Result. Orko holds, most others drop!

Besides that, just take a look at some of the profits one could have taken since Orko Silver started its up march. From early September trading around $0.60 and going to $0.90 up to November for a 50% gain. Then, from early November from $0.90 to around now $1.25 for another near 40% gain.

Also, just take a look at some of these volumes of the last couple of days :

• December 16, 2009 Volume 875K
• December 17, 2009 Volume 689K
• December 21, 2009 Volume 447K

That is some very steady trading to put it mildly. I don't know why but I have the feeling that someone is loading up on shares around $1.20. If that is the case than when this party is done with their Christmas shopping then I expect we could see the start of another UP rally.

I think we have plenty of support at $1.00 and some additional support at $1.10. Anything below that is buying opportunity in my book and that is not saying that it still isn't cheap at $1.20...cause it is.

MACD or the Moving Average Convergence Divergence indicator is trending downwards but not with such strength so as to be concerned. I think this will bounce back up way before we hit the center line. This already shows in the histogram. As you see, the histogram is not increasing but remaining the same.

From the chart we can also see we are still trading above all Moving Averages, and above, well sorta cause we are right at the 10 MA which is around $1.20

So on the daily, I still do not see any considerable downside from here so therefor I must conclude that until said party is loaded up we will remain pricebound around these prices of $1.10 to $1.25.

Orko Silver Weekly Chart

Chart is courtesy of marketclub.
Marketclub - Orko Silver Corp. Trend Analysis  (What's this?)

Weekly, still looking at a BULLISH chart. There is this small delay in Durango station we are experiencing but I reckon we are just loading up on passengers until the Silver Train is fully booked up and ready to go!

The rise in average volume can clearly be seen on the weekly chart. I've drawn a red arrow beneath the red line to visualize this. So, more and more shares are changing hands.

MACD is trending upwards and above the center line and thus our UP trend is still intact.

Orko Silver Weekly ADX Chart


I've also added the ADX chart. Again on the ADX, the Average Directional Index can determine trend strength regardless of the market direction. This non-directional oscillator is based on a range of 1 to 100 (although movements over 60 are rare). If the line is under the 20 mark, the trend is considered to be weak. If the line is above the 40 mark, the trend is considered to be strong. The ADX line is built on the results of two separate technical indicators, the +DI (force of up-moves) and the –DI (force of the down-moves). The default for this study is 14 periods which takes into the consideration the measurements of the +DI and –DI for the last 14 periods.

Knowing this and taking a look at Orko's ADX...clearly UP and the trend is qualifying for a STRONG rating.



YeOldGoldNugget's links of interest

• New Video: As the Dow Goes, So Goes the Country
• New Video: Has the dollar bottomed out?
• New Video: Crude Oil: Lower Levels Ahead?
• New Video: It’s Official Silly Season for Gold
• What do supertraders have in common
• Two Major Forces Collide in the Index Markets
• What’s Gold’s Next Stop?
• Introducing the Perfect Portfolio
• Free Email Trading Course Copy

Gold Heading to $1050?

Gold Spot Daily Chart

Chart is courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

As of writing gold is already trading at $1088.35. It would seem and judging from the ADX indicator that the force of downward moves is increasing which means we could be looking further downwards.

Our 10 Moving Average is already a long way away at $1118 so daily and weekly we have run out of our closest supports.

As you see I've thus drawn a support at $1050. However, that is the first lowest level I'm looking at. There could be supports in between.

Gold Spot 5-Day Chart

Chart is courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

From the 5-Day chart we see that the level around $1095 was taken out so another indicator which tells me we should look for a lower support.

So, what support remains there besides the $1050? Well, I've added two Fibonacci charts, one which has as start the latest rally which started late October and one which covers the entire rally from the beginning of September.

So, take your pick I'd say. Normally, when a stock retraces, traders look for a bounce from either the 61.8% or the 50.0% Fibonacci Retracement lines. So, only supports left would be found on the complete Fibonacci chart.

Gold Spot Daily Fibonacci Retracements


Charts courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

Just know that daily and thus short term, the downside has again increased so take care with those long positions. Gold is not correcting on the rally from late October but it is correcting on the entire rally which started early September so $1050 would indeed be a great target.

Gold Spot Weekly Chart

Chart is courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

On the weekly, the UP trend is still confirmed by the MACD, the ADX and the strong performance gold has had.

Not much more I can say here. I need to see the market perform after this day before I can second guess any further. One thing to watch is of course the dollar! I have absolutely NO frickin' idea on what basis this thing is rallying but it probably will have some very vague reason??? If anyone knows please enlighten me.

Jim Rogers has the following to say :





YeOldGoldNugget's links of interest

• New Video: As the Dow Goes, So Goes the Country
• New Video: Has the dollar bottomed out?
• New Video: Crude Oil: Lower Levels Ahead?
• New Video: It’s Official Silly Season for Gold
• What do supertraders have in common
• Two Major Forces Collide in the Index Markets
• What’s Gold’s Next Stop?
• Introducing the Perfect Portfolio
• Free Email Trading Course Copy

Will Gold Find Support at $1100?

Gold Spot Daily Chart

Chart is courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

After hitting a high of $1226.37 on December the 2th, gold is now hovering around $1115 which is very near the area of where we could find some additional support. Early November from the 10th to the 14th we also held around these prices indicating possible support. Also if you quickly look on the weekly chart you will see that the 10 MA which is around that same level $1100 so varying indicators which could indicate that the $1100 could provide more support than earlier levels.

Looking at the Relative Strength Index shows me gold is getting near oversold. On the chart you will see that on the daily chart gold does not get that far below 30 before turning back up.

The Moving Average Convergence Divergence shows a serious correction! Very wide gap indeed. Lets see if the MACD-histogram declines from here. Sharp increases in the MACD-Histogram indicate that MACD is rising faster than the 9-day Exponential Moving Average and bullish momentum is strengthening. Sharp declines in the MACD-Histogram indicate that MACD is falling faster than its 9-day EMA and bearish momentum is increasing.

What we thus need to see is the MACD-Histogram cubes slowly decreasing in size and that blue line slowly bending over and crossing above the red line right on the center line. Oh, I'm day-dreaming again I see. Well, that's what I would like to see happen anyway.

Lets see what the $1100 will provide as support before we continue looking downwards, OK?

Gold Spot Fibonacci Retracement


Included is the daily chart with the Fibonacci Retracements. We are now sorta hovering around the 38.2 and 50% retracement. The 50.0% stands at around $1125 and is normally the level which traders look at and mostly expect a bounce from. If that breaks there is however still the 38.2% which stands at around that same $1100 level.

Gold Spot Weekly Chart

Chart is courtesy of marketclub.
Marketclub - Gold Spot Trend Analysis  (What's this?)

On to the weekly then, well, I'm still looking at an extremely bullish chart, though one that is now undergoing a correction. How deep that correction will be all depends on the buyers and the sellers. I can scream and shout to all my hearts intent how I feel gold has consolidated enough and how we are again at a level where we could see additional buyers popping up and such and such....but we will have to let the market decide.

Like you already could read earlier, there is the support from the 10 MA at $1100, there also is the center trend line providing possible additional support. The 30 MA which I'm hoping and guessing we won't hit stands at $1000.

RSI has now left the overbought zone and gold is at least technically speaking, buy-able again.

MACD then, difficult to tell. Well, there is the blue line which is clearly turning down with a declining MACD-Histogram and with that a narrowing gap. Normally those are bearish but it is just too early to tell what will happen from here.

I think I just might keep on the sidelines for a little while longer. I have a feeling the market's desire is for this to hit $1100 level before deciding to hopefully bottom out here and continue our leg up.
Just keep a close eye on the dollar, looking back to Friday's action it would seem there are some very swift and speedy traders out there. Dollar up, gold down. Wham! Like clockwork, right at the very same moment.

YeOldGoldNugget's links of interest

• New Video: S&P Going UP..or DOWN?
• New Video: Let’s Take a Fresh Look at Crude Oil
• New Video: Key Levels to Watch in the S&P 500
• New Video: The gold market continues to steam roll ahead!
• New Video: A look at the dollar index
• New Video: What do supertraders have in common
• New Video: Two Major Forces Collide in the Index Markets
• New Video: What’s Gold’s Next Stop?
• New Video: How long will Dow stay Bullish?
• New Video: Has Gold Topped Out for the Year?
• Has the S&P Index Topped Out for the Year?
• CRB Index insight video
• Are You Laughing or Crying About Markets?
• Introducing the Perfect Portfolio
• What does winter hold for Crude Oil?
• Free Email Trading Course Copy
• New Video: ETF GLD is analyzed

Silver Could Be on One Heck of a Ride!

Silver Spot Daily Chart

Chart is courtesy of marketclub.
Marketclub - Silver Spot Trend Analysis  (What's this?)

Couple of highlights, well,...a lot of highlights on this chart actually. The most important ones on this chart however would be the divergences. Take a look at the chart and in particular last year August 2008. You'll see the red line I've placed there following the lower lows silver is making. This line is thus sloping downward.

Tilt your eyes a bit down and look at the other red line below the MACD. That line is making higher lows. So, there is a divergence because the MACD is advancing upwards before the stock is doing so. The stock at that moment is still trading downwards. Taking a clearer look at the MACD you'll see it was making higher lows so there was a positive divergence emerging.

As the naming implies, positive,...meaning a bullish signal. A divergence is also a clearer and more reliable signal then a simple MACD crossover. Even then, there are also different levels and strengths of signals, for instance, a crossover on the center line is a stronger signal than a crossover in the lower or upper zone while a divergence beats any crossover as to signals.

Now, move your eyes to the right to last September, notice the red line making higher highs? Now look down and take a look at the MACD. That one is making lower highs. So we have a divergence again. This time the MACD is down trending while the stock is still making higher highs. This is what is called a negative divergence and thus a bearish signal.

October 19th is when I would have gotten out when I would have been long. Taking some profits off the table and waiting for confirmation of the signal. This case, the divergence did in fact turn out to be a bearish signal as the stock made a clear break downwards from October the 25th.

So, look for those to aid, not to guide!

I've also drawn a resistance line across the chart at 18.00 which coincides with earlier points of support and resistance. Now, it is a resistance but one which soon will be broken and with great ease.

For now, I'm looking at a retest of either the 10 Moving Average or the bottom of the trend line which would be anywhere around the 17.00 level.

Do not however expect too much downward pressure on silver or gold as that will not happen. Up is still the trend. Short term thus maybe a little bit down but when we've taken our little breather I expect us to be trading back to where we left of sooner rather than later.

Silver Spot Weekly Chart

Chart is courtesy of marketclub.
Marketclub - Silver Spot Trend Analysis  (What's this?)

Weekly is as usual where the magic happens! Silver's chart is no different here cause looking at this one is just like reliving October the 5th all over again. We are already trading above 18.00 and we are looking for a definite break above 18.00 on the weekly chart. Could silver finally be on the brink of making some of the same steady gains gold has made comparatively?

With that I mean, gold has since last year October 2008 not only reached its all time high, it has completely smashed it to smithereens! Silver has yet to hit that all time high but could be on the verge of doing the same. Don't know what will happen but the chart is telling me silver has some catching up to do and chart wise things are really lining up for a possible major increase or case of playing catch up.

You can also see the upper trend line going up from October 2008 and after breaking that trend line in June 2009 and going further down we've made our new lower trend line which has held from July on.

What I'm looking at is adding an even higher trend line to the chart which should tell you I'm already looking at a silver price of 21.00. When silver breaks the upper trend line and thus breaks the 19.00 then getting to 21.00 is like talking a walk in the park.

MACD is trending up but the gap is not getting wider. Not yet anyway...that will come...only a matter of time. Just need to drop a little before taking out 19.00 and heading for higher highs.

Looking at both charts I'm extremely bullish on not only most silver juniors but as an investor in Orko Silver, of course also very bullish on the markets reaction towards Orko Silver when the spot price of silver is looking to break 19.00 and more to come in the weeks ahead.

Now, I have no crystal ball but I do try to recognize turning points and have on occasion spotted them in the past so maybe just need to go with the flow.

Last thing, don't get scared riding gold or silver's wave. To those who've followed today's action in gold will know that any down attempts are quickly brought back up again. Like clockwork. Too much basis and fundamentals for gold not to go higher. My 2 gold-nuggets then.

YeOldGoldNugget's links of interest

• New Video: The gold market continues to steam roll ahead!
• New Video: A look at the dollar index
• New Video: What do supertraders have in common
• New Video: Two Major Forces Collide in the Index Markets
• New Video: What’s Gold’s Next Stop?
• New Video: How long will Dow stay Bullish?
• New Video: Has Gold Topped Out for the Year?
• Has the S&P Index Topped Out for the Year?
• CRB Index insight video
• Are You Laughing or Crying About Markets?
• Introducing the Perfect Portfolio
• What does winter hold for Crude Oil?
• Free Email Trading Course Copy
• New Video: ETF GLD is analyzed