US Dollar, GLD, USO Outlook

I follow the US Dollar and the EUR/USD (Euro/US Dollar pair) closely as although I don't trade currencies often, a rising or falling Dollar usually affects the price of dollar sensitive assets such as gold & oil.

So far in pre-market, GLD (gold ETF) popped earlier with about half of the pre-market gains just recently faded but both GLD & GDX are still indicated to gap higher on what I expect is the fact they are anticipating a reversal in the recent near-term uptrend in the US Dollar ($USD, $DXY, UUP). I'm seeing some mixed signals on the near-term outlook for the Dollar. On one hand, the EUR/USD is now approaching the top of a significant support zone as shown on this 120-minute period chart while the pair also has bullish divergence in place on the 15-minute time frame. However, one thing giving me pause regarding a reversal in the EUR/USD (which would translate in a correction in the US Dollar which would be bullish for gold & oil) is the fact that the EUR/USD recent broke down from a bear flag continuation pattern, confirmed with an impulsive move out of the flag although that pattern has only played out about half-way to its measured target.

Bottom-line: I can make both a bullish & bearish near-term case for the dollar although I'd have to lean towards the bearish case (i.e.- EUR/USD bounces off support at or just below current levels). The net effect would be a correction in the US Dollar which would be bullish for gold & oil. I'm going to watch the currencies as well as GLD & USO closely for the first hour or so of trading & might decided to close out yesterday's NUGT short, depending on what I see.

2016-02-23T09:11:57+00:00 Feb 23, 2016 9:11am|Categories: Forex (Currencies), Gold & Commodities|Tags: , , , , , , , |3 Comments


  1. Mrg5a February 23, 2016 9:29 am at 9:29 am

    Would you consider reversing positions and going long GDX if the chart pattern happens to be a High Tight Flag/Pennant?


  2. rsotc February 23, 2016 10:04 am at 10:04 am

    @mrg5a I do see that high, tight flag/pennant & am aware that it could play out as anything is possible but I’d rather let the miners take the next run without me instead of buying on a breakout above the recent consolidation. I was reviewing the weekly (10-year) charts of the top components of GDX today and I have several, such as ABX, NEM & GG (the top 3) at or very close to MAJOR resistance, many with long-term trend indicators that are still in bear market mode although I will say that most are right on the line between bullish & bearish. Therefore, the potential is there for a breakout & sustained rally above this consolidation area but the chances for a very sharp & fast reversal, should that prove to be a bull-trap/whipsaw signal, is just too high & the miners are just too extended for my comfort level. Plenty of other fish to fry right now. I just prefer to let the miners (or any stock/sector) come to me vs. chasing it.


    • Mrg5a February 23, 2016 10:06 am at 10:06 am

      Thanks Randy! Cheers


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