Last week we saw monthly Gold (GC) hitting a critical monthly trendline, as shown by the chart below. This trendline in Gold has been in place since 2011.
Historically, whenever Gold hits this trendline and fails to break it, the downtrend continues.
If we couple that with the US Dollar index (DX), the DX monthly chart below shows the current trend of weakness in the US Dollar.
However, we see this trend hitting support, with declining volume. If the DX were to continue lower, we need to see volume advancing, not declining.
Also, look at the Hawkeye Fatboy chart, which shows that daily Gold is overbought and should start to lose strength, as it cycles back to fair value. This will be accelerated if the US Dollar starts to strengthen, and then Gold will begin to resume its longterm downtrend.
Looking at the daily Gold chart, we can see the weakness in volume already beginning, so watch for the current uptrend on the daily GC chart to be broken and for confirming selling volume.
Hawkeye Perspective: Gold is at a critical point now, so watch for the daily Volume on Gold to see if strength or weakness will prevail during this time.
Strength will be shown by green buying volume, and weakness will be shown by red selling volume. If the US Dollar starts to strengthen, this will accelerate the potential for a down move in Gold.
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