A mid-week daily chart update of the precious metals.
Gold (futures) is still scrapping at the down-trending SMA 50 and SMA 200.
Step 1: Take those out and hold them. Step 2: take out resistance at 1837. Step 3: take out 1920 and off you go to 3050 per the monthly chart’s long-term target.
Sounds simple enough. Reality is always harder. So let’s take it a step at a time. While the macro is negative for gold and especially gold stocks, change needs to start somewhere and that somewhere is amid bad fundamentals. Hence, an open mind on my part as long as the bounce continues.
Silver took out resistance surrounding the SMA 50 and that zone at 23 to 23.75 is now support. The bounce target is the SMA 200 at 25.50. Silver needs to take out 29 to get out of jail and if it does, the long-term target is 50 or more. But again, first things first (and first things are a lot of resistance).
HUI was projected to bounce off of September’s bleak sentiment. We also noted previously that the bounce had a good chance of not ending at the SMA 50 as the two previous attempts had. That was due to said bleak sentiment, which can act as an accelerant when released.
Target #1 was the SMA 50. Check. Target #2 was resistance (which corresponds with the pattern’s black dashed neckline) at 255. Check. Target #3 at the SMA 200 (272.18 and sloping down) lay in wait.
Side note: Steps 1-3 noted on the chart are somewhat different as they are not gauging the bounce, but are the steps needed to clear the whole correction.
If Huey can take out the SMA 200 it would start to get interesting. Take out the August high at 281.15 and hold it, and it would get really interesting, as in potential signal to end the correction from August of 2020. But conservatively, I’ve kept the old ‘get out of jail’ point of 325 in play as the clear, no-brainer next leg up level. Even if that level were to halt the rally it would have been a fine rally indeed. Clear that and much like gold’s 3050 and silver’s 50 the longer-term target is around 500.
Meanwhile back on Planet Reality, HUI is starting to get overbought by RSI as it nears the SMA 200. On the plus side RSI is obviously positive and so too now is MACD. As yet it’s bounce still ‘on’, with a lot to prove.
