Welcome back guys! Sorry for the inactivity over the last few months, personal life has been quite busy. I should be posting regularly from now on so stay tuned!
*Please see comments for supporting charts*
Gold has gone into a consolidation period after making its massive run up, we should expect to see it trading within the symmetrical triangle for the near future. Right now it’s hard to tell whether the breakout from the triangle will be to the upside or downside, however I will go over several reasons why I think the downside scenario is more likely:
1.) Potential Bottom for Yields a. The 10yr yields look to have potentially found its bottom. If this is the case, it’ll most likely consolidate around the bottom before making a run upwards, which will have a negative effect on gold. b. If you look at how the 10yr chart, you’ll see that it recently broke out of a descending wedge pattern. This classic signal usually means a bullish sign, but we’ll have to see if the bottom can hold. c. The bond market has been contradicting the equity market for a long time now, with bond prices soaring while stocks reach all-time highs. I think it may be time for bond investors to take some profits amid an economy that is still not showing any signs of a major recession.
2.) US Dollar Still Has Room To Run a. The USD has been trading in a range for about 2 months now and it looks to be developing an inverse head and shoulder pattern within an uptrend. b. If what the chart is telling us is right, then it means that the next breakout will likely be to the upside, which is also a negative for gold prices.
What does this mean for the miners? The miners have clearly benefited from the increased gold prices, however they’re also trading in a range currently. I’ve drawn out the possible paths that the miners could take based on what happens with gold, I’ve entered a small position in DUST earlier today near the intraday high on GDX. Will closely monitor the trade in case gold does breakout to the upside instead. I will also be looking to take profit near the first support ($25.08 on GDX).
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Trade closed: stop reached
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Will re-enter short if this breakout doesn't hold
Trade active
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Have entered long position instead on the retest of resistance turned support, bullish breakout from the flag means another large leg up is likely.
Nice technical analysis but in regards to the MFI not having enough buying pressure for a move upward, the same MFI pattern was present for the last upward break from July 16-19.
blocknchain
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A consolidation is definitely happening, I'll look into that as well and kinda add to your thesis here. Overall a good indication is the 2-year/10-year Treasury and the dollar, also other geopolitical patterns!