Oct 16th, 2012

Today I needed to reevaluate my short term thoughts on the the dollar. After hours tonight, price has broken much lower going below what we thought could have been a low on Oct 5th. Price is hovering just above $79 right now. The low on the 5th did not confirm as you can see I added the Slope (linear regression) as it is a very good trend indicator and it did not move lower on the Oct 5th low. The slope is very near to turning over and giving a sell signal now confirming that we have a weakened trend and that price will move into a new low. Remember, price always follows path of least resistance. Once we are able to print a daily low in the next few days, we should reverse and then find resistance off of the weekly trendline set back in August at the beginning of this leg down. This high will finish off the lows in metals and signal a reversal.

Silver should have an inverse action. From the low we set yesterday, we have reversed as the dollar moved lower. Again, several days of positive action here coincides with the dollar finding a new daily low. Our high should come into play set by the weekly trendline. That will provide resistance and would be a good sell signal for a short term trader. Silver's weekly low should come into play on the 38% fibo support. A "swing low" off of this bottom will be our buy signal.

GDX, Gold Miners Index, is also moving in similar fashion to the metals. For this particular chart, I want you to pay close attention to how the Slope signals the bottom matched with price action. Also note the correlation between the price breaks, the MACD indicators, and the Slope indicator. The Slop was much quicker in indicating a change in trend much faster than the MACD signaled. This could be a very useful tool in the future.. not only for GDX, but also to apply to any other charting analysis. GDX should continue to move higher and bounce from it's weekly decline trend which it set earlier this month. This will signal one more move lower. Once again, we'll rely on the indicators to turn up to find the low, followed by a reversal in price in which we see higher lows on the close.

Continue to remember that the charts updated on the daily analysis are only the message of the markets at the moment. Just as the prices are fluid, so should our analysis also be. I always try to choose the path of least resistance for deciding price action and I let the indicators and trends lead the way.

Disclosure: No positions at this time. I plan to enter a long position in GDX and SLV once a swing low bottom is confirmed.