DXY - The same inflection point as XAU, XAG, GDXJ, GDX etc.
Looking at charts of DXY, Precious Metals and Treasuries we are at a major inflection point.
DXY shows a clear channel which was broken - we are now back at the channel which should become resistance. We should therefore see DXY rolling over now if we are to remain bullish of PMs. My inclination is to remain bullish PM, which means bearish DXY and bullish Treasuries at these levels. After the very significant back up in Treasury yields, hedge funds are significantly short and need to unwind their short positions. The stimulus bill has to be passed politically in the US - MMT continues, along with UBI. The technicals indicate that this inflection point will be positive for PM, but it may be wrong. The patterns however create fairly clear expectations for break outs and where to cut or increase risk i.e. see previous post on GDXJ flag - so the rules are clear - do not be too long now, await for flag breakouts in GDXJ and XAU to go very long - manage risk by being prepared to exit positions or go short to hedge if the bounce is not sustained. The world needs a much weaker dollar which means higher Bull-Ion.
DXY shows a clear channel which was broken - we are now back at the channel which should become resistance. We should therefore see DXY rolling over now if we are to remain bullish of PMs. My inclination is to remain bullish PM, which means bearish DXY and bullish Treasuries at these levels. After the very significant back up in Treasury yields, hedge funds are significantly short and need to unwind their short positions. The stimulus bill has to be passed politically in the US - MMT continues, along with UBI. The technicals indicate that this inflection point will be positive for PM, but it may be wrong. The patterns however create fairly clear expectations for break outs and where to cut or increase risk i.e. see previous post on GDXJ flag - so the rules are clear - do not be too long now, await for flag breakouts in GDXJ and XAU to go very long - manage risk by being prepared to exit positions or go short to hedge if the bounce is not sustained. The world needs a much weaker dollar which means higher Bull-Ion.
Comment:
DXY is testing the underside of the channel again - this needs to hold and DXY needs to sell off from here to support the XAU case.
Comment:
DXY appears to be being rejected by the channel which supports the bullish case for precious metals. Need a few more days to build more confidence and this needs to be reflected in break outs in the precious metals and stocks but indications are positive at this stage.
Trade active:
Rejection by channel is maintained so we are long precious metals with tight stops.