In NFTRH 839 we noted how important the 50 day averages would be in the precious metals. Especially for silver, which unlike gold, has bullish Cup & Handle pattern potential. Well, this morning silver is right up against the underside of its SMA 50, at 31.66. If it breaks through (and said breakthrough is not a head fake) it could release the Handle and target new highs and a 40+ measurement.
Gold continues to lurk below its SMA 50 and is still technically vulnerable in that status.
GDX is bouncing to its EMA 20 (37.70) in ‘pre’. A nice little whipsaw against my partial hedges (DUST), but not yet proving a bullish case. As a side note, my tolerance with DUST (for the moment) may only be the EMA 20 or this morning’s pre-market highs. But GDX needs to take out resistance at 38.44, and the SMA 50 (39.29 and easing) to start making reparations.
Bottom Line
As has been our theme, we watch silver as the leader. If it busts bullish, it should lead the complex up and out of its correction. Right now it is at clear resistance. Meanwhile, the Gold/Silver ratio is nesting on its SMA 50 & 200 and is neutral while the US dollar is potentially in a bull flag pullback after sending a sentinel northward to make a higher high. For a bullish view on the PMs to resume, we’d want to see both the GSR and USD weaken. That would also help commodities, global markets, etc. The balance of this update states that we are seeing a lurch to the bullish view, but far from a confirmation of one. Again, watch silver.
