Note: Squeezing in an update before heading out to NYC to move our daughter into school. See you on Friday if updates are warranted or on Sunday with NFTRH 410. I’ll try to get a few public posts onto the site in the meantime.
As we have been noting for the last several weeks, gold is sandwiched between long-term resistance at 1400 and long-term support at 1300. Weekly chart…
The daily chart shows that there is also short-term support around 1300 from the May-June pattern and the 2016 trend line. But we can keep in mind as well that a real correction – as opposed to the routine pullbacks experienced thus far – could drop gold to the low-mid 1200’s and not stop the bull. Again, ref. the weekly above. The EMA 75 (currently at 1235 and up turned) would be key.
Silver is a bit of a trickier animal. It is losing the support zone as noted in NFTRH 409. It has now dropped below the 50 day averages (although there was not much volume conviction behind yesterday’s move). The daily chart shows the next support level at 17-18. RSI is already almost as over sold as it got in early June. It could get more so if this is a real correction as opposed to a flash pullback. The alternative, given the lack of volume yesterday, is that this will have been a downside whipsaw, sentiment clean out and reversal. The key to a renewed bullish stance would be silver getting back above the SMA 50 (currently 19.34).
Silver weekly shows resistance around 22 and support around 18, as we have been noting. It came very close at 18.55 yesterday. Note the key weekly EMA 55, which was the bear market guide all the way down and then the bull trigger on the way up. It is up turned and currently sitting at 17.07. If 18 gives way 17 (+/-) is the next key support, when combined with the daily chart above.
HUI daily is and has been clear. The pullback to the 50 day averages and lower channel line is normal. Those things are at 260. The next support would be in the 230’s at the May-June pattern cluster. MACD has an ugly pattern, but we have seen those things before and they usually look foreboding but like the Andrews Fork, are more TA novelty than anything else. RSI, much more important in this case, has dropped to the area that contained the May pullback.
HUI weekly shows long-term support at 250-260 as it eases after finding resistance at the 2013 highs. The next support is the May-June cluster as noted above and then it’s the weekly EMA 55, currently at 199.85 and rising. That shows us how far Huey could drop and still be in its bull market as even there it would be a higher low to the May low.
That is not to say it will drop that far on this pullback. If I had the power of prediction I’d join the headline makers and do just that. But being a flawed human all I can do is present as many relevant parameters as possible so we can have a map, a guide to coming events.
Gold and HUI are completely intact to an ongoing rally theme as things stand now. Silver has broken down. If this is a whipsaw in silver, then it’s back on the bull we go. If the breakdown in silver is real (again, the 50 day averages will decide) the sector could continue to correct further.