Silver and the U.S. Dollar - Moving in Opposite Directions

Things look like they are moving to some kind of resolution on where silver is headed. The main bellwether for where silver goes is not gold but the US Dollar. The two charts below of the US Dollar Index and silver for the same time periods show how these two asset classes are moving in opposite directions. First silver, which has dropped about 15% in 19 days.

click to enlarge

Meanwhile, the US Dollar Index has moved up as much as 4% over the same time frame. Silver investors should keep an eye on the dollar here. The chart shows a symmetric triangle in the making as the dollar just bounced off the lower line and prompted a further silver sell off. The ABCDE is a classic Elliott wave correction pattern that often coincides with triangle formations.

The betting looks like the Dollar will revisit the top marked “E?”, at which point this multi-week rally ends. At that point the probabilities favour a renewed silver price surge.

Comments

[MadScientist:]

Agreed. This short term correction in silver, gold and commodities is directly correlated with the weakened dollar. Over the past three weeks the dollar has been gaining ground, and will do so for a bit longer - my guess is that it does not break 82 (its 50 day EMA) and bounces back down. That will trigger a resurgence in PMs and commodities, as well as oil.

Disclosure: Recently switched from UGL, AGQ, and DXO to GLL, ZSL, and DTO. Ready to switch back once the momentum shifts again.

Jun 22 02:13 PM

[dieuwer:]

How about dollar tops this Wednesday, right after FED announcement?

Jun 22 06:43 PM

[bones33:]

I'm shortiing hog Bellys'.Look at all the unsold bacon u see in the stores.

Jun 23 10:52 PM