Chart 1 – Key levels to watch on Gold heading into the FOMC Rate Decision on Wednesday:
o Support at the 50-day moving average near $1,180, a breakdown would signal the resumption of the downtrend with risk to the December lows;
o Resistance at the January highs, ability to make a higher high would signal upside back toward the 200-day MA near $1,270.
Chart 2 – The key ratio we continue to monitor for a directional signal in gold equities is the GDX versus GLD. Recall that a key a staple of a gold bull market is outperformance of gold stocks relative to gold. Ability for the GDX:GLD ratio to break above 0.21x along the November and January highs would, in our view, provide a signal to build an overweight gold position. Failure at this level, however, would keep the series of lower lows and lower highs intact.
Chart 3 – The U.S. Dollar Index has pulled back to support along the December lows. A break below this level would sgnal a deeper correction back toward the 200-day moving average. Resistance on the upside exists at the 50-day moving average at 101.50.
Gold: Key Levels Ahead of Fed
GDX vs GLD Ratio: Watch for a Break Above November and January Highs
U.S. Dollar Index: Key Levels
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