Let’s take a snapshot of where the precious metals complex stands this morning.
Gold probed the upper 1600s and support before the bounce (which continues this morning). Is this the bottom? There is nothing technically to indicate that. But it did drop to a preferred support zone amid terrible sentiment, so it’s possible. You can see the first objective, which is the lost support (now resistance) in the 1750-1770 zone. If gold can take that out it would set its sights on the channel top and SMA 50 & SMA 200.
Silver has not tested the SMA 200 as expected, but neither has it negated that possibility as it rises to test the SMA 50. Clear that and hold it and silver could be on its way. Stay below it and we could test the SMA 200, which is conveniently rising toward clear short-term lateral support.
HUI has tentatively taken out the first resistance level, which it is trying to turn to short-term support. Resistance #2, which is sterner resistance, awaits at around 274. If that is overcome then the job is to take out the down-sloping (blue) SMA 50 and the red dashed neckline. Finally, to set Huey free for a more enduring rally the convergence of the channel top and SMA 200 must be taken out.
Huey is flashing a death cross of the moving averages which, sooner or later, usually triggers a hard bounce to screw up death cross believers. RSI and MACD are still negative but MACD is triggered up and RSI is above the EMA 20, which I use to show a sort of trigger for it as well.
HUI/Gold ratio has bounced, but to make a positive signal it needs to at least take out the SMA 50. Then the January high, which would also bust it above the SMA 200.
SIL/Silver ratio is not inspiring at this time.
Silver/Gold ratio is a-okay, trending up and thus far benefiting the inflation trades much better than gold stocks.
Logically, SIL/GDX ratio shows a solid uptrend and if this chart were taken in a vacuum it shows a buy opportunity in silver miners vs. gold miners.
