Don’t lose sight of the Shiny Metal! – November 7, 2022


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This is Scott with your Chart of the Day. We’ve been talking a lot about the Dollar ( NYSEARCA: UUP ), especially over at Stock Market Mentor. We’ve been watching this strong dollar trend all year long.

Now we are trying to get into this clear consolidation range. You can see how the dollar has kind of been going sideways here since September, that’s a good thing for risk assets. But my question is, is it a good thing for Gold ( NYSEARCA: GDX )? Because Gold ( NYSEARCA: GDX ) has been really lagging as the dollar gains strength.

All year long, outside of the initial invasion of Ukraine, this has kind of been breaking down here. And the last couple of months it’s given these big zigs and zags, up and down, up and down. And recently it zagged back to resistance in a really short amount of time. I like to pay attention to how fast things get back to clear levels of resistance.

You can kind of see in this sequence here how it broke down and then it took a while to get back to the 50-day. And then it broke down, and then it took a while to get back above the 50-day. Well here recently, it broke down and within 2-days it’s not only back above the 50-day. It’s at a clear level of resistance, right around there.

It tried to act as support but couldn’t. It tried to act as support but couldn’t. Clear resistance, clear resistance. So because it got right back to resistance really quick, that kind of tells me that there is some potential strength underlying here on GDX ( NYSEARCA: GDX ). What I want to see from this pattern is a breakout above that level and a close above that level coming on higher than average volume.

Now, for that to happen we are going to have to see a significant drop in the US Dollar ( NYSEARCA: UUP ). So be sure and watch both of these in tandem. Don’t lose sight of Gold ( NYSEARCA: GDX ) because I think there might be something going on here. I don’t think there is a trade right here right now but it is definitely going to be something I’m watching daily.

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