The dollar is facing an important test.
The U.S. Dollar Index ($USD) bottomed in early September. It then went on to gain more than 4% in the next two months.
Now… a 4% gain may not seem like much in the world of stocks. But, for a currency, that’s a tremendous move higher.
Since the start of November, though, the dollar has been under pressure. It’s down 1%, and the chart appears to have broken its bullish pattern of higher highs and higher lows.
Take a look…
$USD broke below the rising (red) support line last week. The next support is the 50-day moving average (MA) line just below at $93.33.
Dollar bulls need this level to hold. Otherwise, the buck is likely headed back down to retest its September low.
Of course, this chart is important to gold traders too. Gold and the dollar tend to move in opposite directions (that’s not necessarily true for gold stocks and the dollar – which we’ve discussed before).
So, while dollar bulls are hoping for support to hold up, gold bulls are looking for a breakdown.
For the moment, we have to give the dollar the benefit of the doubt. Since the buck is trading above its 50-day MA, the momentum is still bullish. Support is likely to hold – at least on the first test. And the dollar is likely to bounce soon.
But if that bounce fails to rally the dollar above the early-November high, and instead rolls over again from a lower high, then look out below. We’ll have a new downtrend in place.
That increases the odds of the dollar breaking support sometime in December. And that – logically – increases the chances of a year-end rally in gold.
Best regards and good trading,
Jeff Clark
P.S. While a year-end gold rally would be profitable for gold stock investors, my Delta Report subscribers will do even better…
And it’s all thanks to a “secret key” I discovered on March 2, 2000, when I turned what was nearly a devastating loss into an absolute fortune.
To hear my story and learn more about my “secret key,” click here.
Reader Mailbag
Today, we hear from Delta Report subscribers about their recent experiences with the service…
Nice profitable week. A bit scary holding M, DKS, and EATS when they were all underwater but I had confidence in you and made good money with all three.
I have been follower of yours since your early days and I really appreciate your morning update and continuous follow-ups. Thank you.
– Richard H.
I’ve been on board for about 6 weeks. I am a longtime investor but not a sophisticated one, using primarily long stock positions which have not created the success I expected. My best investment was my 401K in index funds which has been successful. I have had some big losses in tech stocks and mining stocks over the past 20 years which set me back considerably. Uranium just about killed me about 15 years ago.
Anyway, I am now excited to follow your service. I tried commodity options in the past and lost most of my allocated capital. Your service looks much more promising and I hope to build my account with singles and doubles rather than looking for home runs with bigger risk.
So far I had profits on M, SPY and EAT but the losses on ABX will probably offset those profits. Regardless I see a new way to invest through your service and signed up for the lifetime offer which will likely be a great investment for the long haul.
I appreciate the frequent updates and obviously you enjoy what you are doing for your subscribers. Thanks and I look forward to each week and the opportunities you will share with us.
– Craig E.