US Dollar Extended Complex Head and Shoulder with Gold ETF

Short US Dollar / Long Gold-Silver

US Dollar has a complex head and shoulders pattern. The right shoulder is taking a long time to develop. The overall pattern is a multi-year pattern, so time length should have been expected. We should expect some downward pressure in the more recent weeks, followed by consolidation and a big drop once the original neckline is breached.


Gold has shaped what looks like an AB-CD pattern. The measured breakout should take us to the support line held at point B. The Bullish Wolfe Wave I was tracking earlier was dogged by bad symmetry at the tail end. However, I do believe in Wolfe Wave pattern measured target, will simply visit ( GLD 180+, SLV 40+) PRZ at a much later date. Silver should follow a similar patter.

Dollar Looks for Follow Through on S&P 500 Drop, Fed’s QE3 Shift
By John Kicklighter, Chief Currency Strategist

Dollar Looks for Follow Through on S&P 500 Drop, Fed’s QE3 Shift
Event risk through the final session of the trading week drew a lot of excitement and volatility for both capital markets and the greenback. The March nonfarm payrolls (NFPs) was the topic du jour, and its implications for the Federal Reserve’s monetary policy moving forward insured all traders were paying attention. The data was an interesting mix with the 88,000-position net increase in jobs significantly missing forecasts and portending a material slowdown in economic activity. This negative interpretation was enough to shake the S&P 500 and broader equity market to a tentative – but aggressive – downdraft. Risk aversion certainly plays to the dollar’s appeal, but it is the stimulus implications that investors truly care about – be they equity or currency traders. Despite the poor payroll showing, the jobless rate ticked down to a fresh four-year low 7.6 percent clip. And even if it hadn’t, would that be enough to offset the material change in the policy group’s attitude as of late? A tempering of QE3 within months seems highly likely, and the implications for risk trends and money supply are crucial.

Gold Posts Strong Recovery after US NFPs
While there is evidence that the Fed is still on pace – if not closer – to curb and possibly exit its expansive stimulus program before the year ends, gold traders were satisfied with taking the US employment figures at face value. The precious metal surged immediately after the labor data was printed and went on to post its biggest one-day rally (1.7 percent) since November 6. There is certainly fundamental strength for the precious metal to tap moving forward in the expectations for currency devaluation on the yen’s and euro’s account, but it is the dollar that is the floating concern for traders. If the dense round of Fed speeches due this coming week continues to lead us down the path of a tempered QE3 program, the dollar-gold connection can prove overwhelming. Meanwhile, the unwinding of exposure by futures traders and ETFs continued through this past week. Volume held elevated for Friday’s rebound – but was on par with the selling effort.


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