The Dollar

10:17 am PST. The dollar bounced right up off the lower trendline. This is getting interesting. Gold, the Dollar, and the Yen have traded in tandem since last week Monday. Today is the first break since then between the dollar and gold.

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Gold

6:28 am PST. Gold is now testing the breakout of the ascending triangle pattern at 1260. Gold has to close above $1300 on a weekly basis to see a real sustained rally leaving behind any notion of a possible breakdown below $1000. If it fails to do so, gold could go back down to test $1220, and then the pattern will completely change leaving open the door for the possibility of a further break down to $1000.

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Japanese Yen & Gold

The Japanese Yen and Gold clearly have a close correlation in price movements. If the Japanese Yen drops to new lows, that will spell a steep sell-off for gold as well. I do not, however think the Yen is a leading indicator for gold. If you look at the 2011 high in gold and the Yen, you see that gold peaked before the Yen. Gold may be a leading indicator for the Yen. Also, to me, the Yen has a more bearish chart pattern than gold. The Yen could also make a new low while gold makes a higher low.

Just doing EW analysis, I do see some possibility of the Yen dropping to new lows at around $75-74, but not right away. There is a whole lot of support right now before that happens. If the Yen intends to drop to new lows, prices would most likely triangle into a wedge for several month, possibly into August, before dropping down to new lows. That would most probably correspond with a rally starting in August in the Dow.

Likewise, I think Gold must exceed $1300 to really see some sustained upside movement. If gold fails to exceed $1300 by June/July, gold could see trouble ahead.

In this chart you see the FXY, yen etf, juxtaposed with GLD in black.

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FXY correlated with GLD in black.

FXY has already broken down from a rising trendline. If prices cannot exceed the high at 88.90 by June, I would say just by my own EW analysis, gold and the Yen might see new lows.

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FXY on a shorter 60-min time frame.

Silver

5:24 pm PST. Silver has to hold the bottom rising trendline this week at $16.50ish, because if it breaks below, we could see a breakdown of gold down to the $800s into next year. Very very key point of support that silver must hold. Otherwise, I think it could could just get really ugly for the precious metals. Much worse than what we saw today.

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Closing Thoughts

1:01 pm PST. SPY gapped up again this morning and continued higher all day. The gold mining stocks and treasuries remained under pressure. GDX and GDXJ have more downside tomorrow.

The dollar UUP closed below the 200 sma daily and looks bearish. If it breaks down from the lower trendline, look out below. It might provide some temporary support here, we will see.

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The FXE could bounce to $115 over the summer. Maybe, not 100% sure. Screen Shot 2017-04-25 at 1.01.26 PM

 

GDXJ

7:58 am PST. I sold JDST way too early. I got in on JDST at around $13 and exited yesterday. It is always the last wave that is the most dramatic as everyone heads for the exit doors at the same time when it becomes most obvious. Here GDXJ is nearly reaching my target. It takes a lot of training to see where prices will likely go, but it takes another kind of conviction to trade one’s own perceptions. I could just die because I missed today’s move. All that work and you have to make it pay. Experience counts for so much.

The crazy thing is that even the Market Makers are only going in today with bigger lots. Even for some of those guys/gals, they wait until it becomes very obvious. For example, I saw 1.5 million shares block traded on GDX at 22.29, and then NEM 506,000 shares at 32.79. It is a little late, but they did get some short-term movement on the prices. I know some caught most of this move down today. I want to be one of those traders. I want to be one of the best traders. One day, I will see my own block trades on these indicators.

I think in a few years, I will execute my trades much more precisely catching most of the gains in the moves. I will not give up.

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Pre-market

6:13 am PST. SLV, Gold, and GDXJ continue to head to the targets I mentioned in previous posts. The Dow looks like it is catching up to the QQQs and will soon make new highs along with the SPX. I expect treasuries to remain under pressure as long as the Dow continues to rally.

It was interesting how yesterday the dollar dropped along with gold in face of the Euro rally.

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