Yesterday we reviewed some reasons why the precious metals could be on a rally that is something better than the previous failed bear flag rallies. Today we balance that with a look at the weekly chart.
The would-be bottom or rally attempt is coming from a logical point at the ‘low 200’s’ target we had on radar for months before it was registered. MACD stinks and combined with the RSI, the only positive is the extreme over sold condition. If a real bounce happens, this over sold condition would be fuel for a sustained rebound, whether a bear market bounce or something better.
What the HUI needs to do though is break the shape of that would-be flag to avoid having this turn into another in a line of failed (bear) flags. Today’s little pullback is normal, but I for one am not going to tolerate days of flag making with an upward bias. I want to see a hard push upward resume so that a flag does not form here.
Again, today’s open is obviously normal considering yesterday’s surge. But I would default to risk management as long as HUI remains in a potential flag. One of these days my cautious approach is going to be wrong. But that has not been the case since November so I guess I will stick with it.
Here is the daily view once again, for reference.
We want to see Huey get through RSI resistance at 50 and the price chart pop through the EMA 20. If that happens we are targeting the 50 day averages and the gap up there around 250.
