Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The US Elections, US Dollar, Stocks, and Gold

By

The decline in gold is likely not over but relatively close to being over.

PrintPRINT
To see what we can expect on the precious metals market in the short term, let's move on to today's technical part. This time, we will focus on markets that can impact the precious metals market in the following days and then we will move to the strength and direction of this impact. We'll begin with the analysis of the US Dollar Index (charts courtesy of http://stockcharts.com).



In the medium-term USD Index chart, we see a small possibility of another retest of the declining support line. While lower index values are still possible here, it already seems that the consolidation period has ended and the USD Index is ready to move higher. Moves to the upside appear to be more likely than not. These implications are based on this chart alone, however.



Turning now to the short-term USD Index chart, this is where we find the key details concerning the USD Index this week. We have seen a breakout here and it has been verified by three consecutive daily closes above the declining resistance line. The index now appears likely to move higher. Please keep in mind, however, that the cyclical turning point will soon be reached.

Since the USD Index has been moving higher of late, the cyclical turning point will likely coincide with a local top. It seems this will be fairly soon, likely at the end of October or early in November. There appears to be a good chance that the Index could move to the lowest Fibonacci retracement level (80.74), which is slightly above Thursday's close. While a move a bit higher to the 50% retracement level (81.38) would not surprise us, a move above this next level is unlikely. This is because it would invalidate the very long-term declining resistance line, something which is highly unlikely.

Consequently, the very short-term picture remains bullish here -- but beyond that, the situation is rather unclear. A local top will likely form within the next two weeks (more likely next week), but it is too early to discuss the next moves for the dollar. How soon the top is formed as well as how high the index goes before reversing are both critical pieces of information that are missing at this time. What we have now, however, seems enough to form a strategy for precious metals, because their charts provide other important pieces for this puzzle.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE