Just another update micromanaging the ongoing bounce in the metals and Gold Bug index.
Gold has reached the top of the original channel we have been following, but I’ve added a new channel (blue dashed) that coincides with the SMA 200 at 1858. The bounce could theoretically end here. But the SMA 50 (1748) is now short-term support and that is the key to keeping the bounce going. Should gold hold support and turn up anew, we’d be looking for around 1858. Meanwhile, RSI got a little far above its EMA 20 and a small pullback would be normal.
Gold’s general status is still technically ‘bounce only’ within a downtrend.
Silver continues to be more bullish relative to gold as it retains its daily chart uptrend. Yesterday it took the SMA 50 and this morning it is easing a bit. As with gold, the SMA 50 (26.06) is now the key short-term support. Resistance continues to be the top of the long-term resistance zone at 27.50.
Silver either made a double top at the end of January or is in a bullish Cup, having broken the Handle (wedge shown on the chart). Unlike gold, silver leans bullish until proven otherwise. RSI got a little peppy and so a slight pullback would be normal to an ongoing bull case.
HUI drilled into the next resistance zone yesterday and is eyeballing the SMA 200 after breaking the downtrend channel. It is doing what it would need to do to change the downtrend to up, but regardless of what trendline aficionados may think there is no trend change until the SMA 200 is taken out and then 325.26 is taken out (and held).
RSI and MACD look good and the status is an ongoing bounce with short-term support at 290 and 282.
So okay, the above say ‘bounce only’ but ‘bounce still on’. What – other than taking out the milestones noted on the chart above – could eventually help the bullish case? We turn again to the HUI/Gold ratio, which poked the SMA 200 yesterday and closed above it. Obviously, we’d like to see that hold here but if things get a little rough the EMA 20 (.1596) could be tested within a still-intact rally situation.
Bottom Line
- Gold has bounced to a potential limit point, but another and possibly better one is higher at the SMA 200 (1858). Support @ 1748.
- Silver is and has been relatively bullish with its daily chart trends up. Support is at 26 and its near-term job is to take out 27.50.
- HUI is looking for the SMA 200 at 307, which is the top of our bounce target of 305-307. As stated all along the rally, we’ll save more bullish projections until such time that they can be made rationally as opposed to hopefully.
- HUI/Gold Ratio is still looking good after we noted the initial bullish hint back on March 29.
- Anecdotally, the usual cheerleaders are starting to do their thing. They always mark disturbance points if not outright rally endings. Just sayin’, you can always count on the gold bug “community” to end its own rallies, tried and true. I don’t think they’ve emboldened enough yet to end things, but we need to keep a watch on sentiment too, especially as important upside decision points are reached.
