UPDATE on PRECIOUS METALS and CRUDE OIL (1:00 pm EST)
Gold and silver rallied strongly last week. There is a possibility that gold started a new medium-term cycle on March 1 at $1304 and that silver started a new medium-term cycle with last week's low of $16.13 (March 20). If so, both metals could be very bullish now and ready to rally to new highs. I would like to see gold close above $1366 fairly soon to support this bullish scenario. As I mentioned last week, a concern we have this week is the fact that this market is rallying into this week's reversal zone. Although this reversal is not specifically targeted at the precious metals, it could have some influence on them so we could see a dip in prices. We won't worry too much about this as long as gold holds above $1320. If we do see a dip, it may give us a good opportunity to go long in silver. Holding my long position in gold but still out of silver.
The U.S. Dollar Index has been falling and is now at a support level centered just above 89. This week's reversal zone is targeted at currencies so we could see a bounce from this support this week or next. Such a bounce could push down gold and silver prices, but this would likely be very short-term. Last week directional momentum in the dollar chart turned 100% bearish. The greenback may soon be headed towards a serious breakdown, especially if it breaks below 88. If that happens, it could drive a major rally in the precious metals.
It is getting late in crude oil's current medium-term cycle which means we should be soon seeing a cycle high followed by a significant correction down to the bottom of the cycle. Today crude prices seem to be making a double top to the Jan. 26 high of $66 (May contract chart), and this week's reversal zone could also affect crude. We could therefore be seeing that cycle high now. A normal target for this high would be around $69. If the broad stock market bounces this week (see yesterday's blog), crude could follow it up a bit closer to that target price. We will watch to see how this unfolds. An approach to that $69 price may give us a good opportunity to sell short. On the sidelines of crude for now.
Gold and silver rallied strongly last week. There is a possibility that gold started a new medium-term cycle on March 1 at $1304 and that silver started a new medium-term cycle with last week's low of $16.13 (March 20). If so, both metals could be very bullish now and ready to rally to new highs. I would like to see gold close above $1366 fairly soon to support this bullish scenario. As I mentioned last week, a concern we have this week is the fact that this market is rallying into this week's reversal zone. Although this reversal is not specifically targeted at the precious metals, it could have some influence on them so we could see a dip in prices. We won't worry too much about this as long as gold holds above $1320. If we do see a dip, it may give us a good opportunity to go long in silver. Holding my long position in gold but still out of silver.
The U.S. Dollar Index has been falling and is now at a support level centered just above 89. This week's reversal zone is targeted at currencies so we could see a bounce from this support this week or next. Such a bounce could push down gold and silver prices, but this would likely be very short-term. Last week directional momentum in the dollar chart turned 100% bearish. The greenback may soon be headed towards a serious breakdown, especially if it breaks below 88. If that happens, it could drive a major rally in the precious metals.
It is getting late in crude oil's current medium-term cycle which means we should be soon seeing a cycle high followed by a significant correction down to the bottom of the cycle. Today crude prices seem to be making a double top to the Jan. 26 high of $66 (May contract chart), and this week's reversal zone could also affect crude. We could therefore be seeing that cycle high now. A normal target for this high would be around $69. If the broad stock market bounces this week (see yesterday's blog), crude could follow it up a bit closer to that target price. We will watch to see how this unfolds. An approach to that $69 price may give us a good opportunity to sell short. On the sidelines of crude for now.
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