The Gold Market Still Has Room To Rally Before The USDX Awakens
2022.05.18 16:01
Junior miners are rallying “slowly but surely,” which means that once again practically everything that I wrote on Monday and yesterday either happened in tune with that or it remains up-to-date; and thus, today’s technical part will be rather brief.
Let’s start with what I ended yesterday’s analysis with—the USD Index.
I previously wrote the following:
USD Index Chart
[May 17]
USD Daily Chart
After moving to 103.245, the USD Index futures moved back up, which is in perfect tune with what happened in late 2014, when the USD Index was correcting a breakout above the previous two important highs.
Therefore, it’s quite likely that after a few-day-long pause, the USD Index will rally once again. This means that the precious metals market still has room to rally in the next several days.
Gold Daily Chart
In yesterday’s trading, gold futures were up by less than $5 (0.27%), so it’s nothing special, but it’s a “notable nothing” as gold didn’t return to its previous decline mode.
In other words, my previous comments on gold remain up-to-date:
While gold was up by 0.27% yesterday, GDX was up by 0.19%, and GDXJ was up by 0.85%. It seems that we’re using the right proxy for making money on the rebound as it’s moving up most visibly. No wonder—it’s been the most oversold.
GDXJ Daily Chart
GDXJ 240-Min Chart
Of course, there will be some back-and-forth movement on an intraday basis, but it doesn’t change anything. Junior miners are likely to rally this week, nonetheless. And perhaps not longer than that, as the next triangle-vertex-based reversal is just around the corner—on Friday/Monday.
SPX Daily Chart
Meanwhile, the S&P 500 Index has clearly invalidated its head-and-shoulders pattern in terms of the daily closing prices, which is a buy signal on its own.
This means that the odds of a short-term rally in the following days have greatly increased. This makes the current long position in junior mining stocks even more justified and it is likely that profits on it will increase shortly.
