Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Which is Bullish for Gold, U.S. Dollars Rally or Silvers Big Fall?

Commodities / Gold and Silver 2010 Aug 14, 2010 - 05:07 AM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleTwo weeks ago, we've posted an essay in which we've analyzed i.a. the Euro Index. We've stressed that a slight move lower may be seen in the short-term, which will likely be coupled with a corresponding move higher in the USD Index. This is precisely what we have just witnessed, so without further introduction, we will let you know how low can it take the Euro Index and how big rally could we see in the USD Index. In the latter part of the essay we will provide you with our very-long-term silver chart.


Let's start with the long-term Euro Index chart (charts courtesy by http://stockcharts.com.)

We must begin this week’s technical analysis section with a comment on the long-awaited correction, which alas is clearly seen in the week’s long-term Euro Index chart. After a move above a key resistance level, confirmation did not occur, and subsequent days saw a decline below this level.

In last week’s Premium Update, caution was suggested and a period of consolidation was termed likely. “For the short-term we remain skeptical towards a continuation of the rally in the Euro Index until we see confirmation for a breakout or consolidation. The latter still appears more probable.”

Once again, applying hard and fast rules as part of our technical analysis and interpretation resulted in the right call rather than unwarranted optimism. The reason for this comment is that we would like to emphasize the need to wait for a confirmation instead of chasing the market.

The short-term Euro Index chart this week provides a clearer picture of the correction we mentioned above.  Note that the RSI has moved below the 50 level and the Euro Index itself is very close to the first Fibonacci retracement level which is based upon the previous rally. The long-term declining resistance level will now likely become a support, as it intersects with the key 61.8% Fibonacci retracement.

This means that there is a strong possibility that the euro will decline again in roughly the same amount as we have already seen. This will result in a target bottom, slightly below or at the 125 level. At this time, it does not seem likely that the bottom will move to levels seen last June, but we surely can't rule that out completely. Indications are that 125 is an accurate minimum target for the current decline. This seems to be about 50% likely with a 25% chance that the bottom will be above 125 and a 25% chance for moving below this level.

In this week’s long-term USD Index chart, we see a slight rally, which was expected in view of the Euro Index decline. This is consistent with what we stated in last week’s Premium Update. We identified a possible profit opportunity for FOREX traders with a rise in the dollar likely.  This turned out to be right on the money.

From a precious metals perspective, there is little to be said at this time. The impact of the currency markets this week has been minimal, yet positive.  However, it is still possible that gold and silver will move higher in the next few days only to move lower once again afterwards. Additionally, it is still likely that the precious metals sector would decline towards the end of August.

In the recent past, gold, silver, and mining stocks declined slightly when the USD Index showed a strong rally. This was followed by a consolidation for the USD, which coincided with a precious metals rally. All in all, the precious metals sector has shown strength in relation to the dollar.
 
Let's take a look at the short-term chart for more details.

In this week’s short-term chart, we see a higher, broader and bigger target for the short-term rally in the USD Index. The strong momentum seen recently has been surprising and our prior target range has already been reached. It is possible that the USD Index could move as high as 84 and its next turning point may be seen relatively soon. A top in the USD index could correspond to one for precious metals as well.

Other than the above, the relationship between gold, silver and mining stocks and the dollar remains unclear at this time. Turning points may coincide, but it is a situation, which must be continuously monitored. As always, Sunshine Profits will be up to the task.

Before summarizing, let's take a look at the big picture regarding the silver market - since both metals usually move together the below analysis should prove useful to gold Investors as well.

On the very-long-term chart this week, emphasis is given to the TRIX indicator, which has declined somewhat in the past weeks. This is a bullish signal for the long-term as important developments usually occur after the TRIX reaches zero. There is a possibility that this level may be reached in the relative near-term, possible once we've seen the end of the summer decline that we've described in the full version of this essay.

A sharp decline in silver’s price could cause a substantial decline in the TRIX, which would be a healthy and normal development for the market. The coming decline might appear scary at the first sight, but if it does materialize - please keep in mind that it's something that will allow the market to move even higher in the long run.

Previous "second" rallies for the white metal have often been followed by declines after silver failed to move above previous highs. After that we've used to see corrections that took silver much lower - correcting 50% of the preceding rally.  Silver may or may not get this low in its next decline.

The current retracement level is based on the 2008 low and the 2010 high. Since the 2008 decline was generally an unordinary development, the $14 target (as visible on the chart above at the 50% retracement) might be too low, and perhaps the $16 level would hold.

Summing up, last week’s view for the short term was quite accurate and we now see a possibility of higher USD Index levels in the coming week. The Euro Index will likely decline again in the week ahead, continuing the trend, which took hold during this past week. Precious metals are likely to move slightly higher in the short term but we remain bearish for the next few weeks in advance of an expected late summer low in much of the precious metals sector. Full essay with more details is available to our Subscribers.

Technically, lower silver prices will be healthy not only for silver but also for gold and mining stocks as well. We have seen massive rallies quickly follow severe declines in silver’s price. This may, in turn, eventually lead to higher silver prices, possibly the next rally would take silver to $25 - $35 area.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
Sunshine Profits

    Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

    Sunshine Profits provides professional support for precious metals Investors and Traders.

    Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits’ Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free trial to see if the Premium Service meets your expectations.

    All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in