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Today, I am going to focus solely on the short-term technicals. We have covered the fundamental triggers sufficiently in prior articles. Sentiment has rebounded across the complex, which suggests the low is already in place but also maintains the possibility of a positively divergent lower low. Money managers and commercials are adding to their longs and shorts respectively, which is bullish for prices. The dollar and real yields are falling again. Everything is looking up, as I said back on March 11. All we need now is the break of key resistance to confirm the bottom is in.
The prior high of ~1760 and the 50-day moving average were the first signs that the bottom may be in. We have broken them both today as I type, reaching a peak of 1770 so far. However, I still maintain that 1800 is the level to break to avoid this being just an ABC corrective rally off the prior low of 1677. The set-up is in place for a lower low should Gold fail here and head south again. Watch for a break of 1722 as a possible warning sign.
That said, the fact that the prior low was more or less a positively divergent double bottom and the MACD Line is coming off its lowest level since July 2013, I am more than a little cautiously optimistic. Above 1800 and I’m only looking up, short-term reversals aside. Above 1860 and I’ll see you at new record highs.
Lastly, even if we do fail here and head down to a lower low, I will be loading up the truck down there. Different routes, same destination: UP! Bullish odds have increased significantly with the break of 1760, but don’t pop the champagne just yet, imho.
Silver has clearly broken its downtrend (purple line) and, as of today, its prior high and the 100-day moving average also. All that remains is the 200-day moving average at 26.16 and the March 18 peak of 26.74. Through there and above 40 is possible before we’re done.
Only a drop back below 24.68 and, more importantly, 23.74 would postpone the coming rally even further, imho.
The principal resistance in GDX is 36. As you can see above, that is exactly where we have stopped today, so far. If broken, only the 200-day moving average above there at 37.16 remains as resistance against a target of at least 50 next and perhaps as much as a new record higher of 70-plus before the next big pullback.
Support is now at previous resistance around 35 and the prior low of 33.83.
Once again, SILJ tends to be a leading indicator for the rest of the complex. It broke its downtrend two weeks ago, has successfully backtested it, and now only the prior high of 16.30 is in the way of a potential move up to 30 and beyond. Only a break below the prior low of 13.76 negates this outlook.
All-in-all, the research has been done and everything is pointing north for the complex, at last, but we still need to take out resistance in style before celebrating the gains ahead. The key resistance for Gold is 1800, imho, and it’s close!