Shortly after the being highlighted in yesterday’s video, /DX (US Dollar futures) made an impulsive breakdown below the most recent ascending price channel & divergent high, providing a clear sell signal on the Greenback while also confirming yesterday’s breakout in /GC (gold futures) and GLD (gold ETF).
DX 60m May 8th
Likewise, after a breakout & backtest of the lower trendline, /E7 (Euro futures) also went on to make an impulsive breakout above the secondary, BOD (benefit of the doubt) trendline to trigger a solid buy signal & confirm the breakout in gold. As the top-weighted component of the US Dollar Index, the Euro will essentially move inversely to the $USD. While yesterday’s buy signal in the Euro indicates a likely trend reversal, with more upside in the coming days to weeks, these small divergences could provide a near-term headwind (pullback or consolidation) before the next leg up towards the 1.09ish target.
E7 60m May 8th
However, it looks like /GC gold was one step ahead of the Euro with comparable divergences that have already played out for a relatively minor pullback to the 1718 former resistance, now support level. As such, this is an objective level to add to or initiate a new position on gold. Should the 1718 support fail to contain this pullback, a backtest of the trendline (top of triangle pattern) may offer another objective long entry although I favor a reversal & rally off this 1718 support level.
GC 60m 2 May 8th
As anticipated, /SI (silver) has outperformed following yesterday’s breakouts in both, with silver hitting & still testing the 15.841 target/resistance level & the next buy signal to come on a solid break above it.
SI 60m May 8th
Bottom line: Yesterday’s breakouts in the precious metals & currencies were impulsive & followed divergences that indicate those moves were most likely the start of a new trend vs. simply counter-trend rallies & corrections. However, the metals & currencies may or may not need to correct a little more in time and/or price to work off the very near-term overbought conditions and small divergences that were recently put in. I’ll continue to monitor the charts & post any significant developments asap.