This Rising Wedge Spells Trouble. Big Trouble.

Investorideas.com (www.investorideas.com
Newswire) It’s like yesterday, but with an additional SELL
signal for the miners.
Here’s why:

Shutdown Drama, Market Reality

That’s what I wrote on the USD Index -
quoting:

The fact that we did see the government shutdown doesn’t
change that much. What matters is how long it will remained shut
down. And I don’t think that this will happen for any
reasonable amount of time. I view the current closure as a hard-ball
negotiation pressure and… well, another part of the political
theater. I fully expect this to be reversed any day now.

And apparently, the markets are catching up to this as well.

The USD Index is slightly up after an intraday reversal. No
biggie.

What happened from the technical point of view is actually bullish
– the USD just verified its breakout above the declining red
resistance line.

This remains to be the case – we saw another
bullish reversal
and another move higher.

Quoting further:

While the USD Index’s reversal is bullish, we see exactly the
opposite thing in gold, silver and miningstocks.

All of them reversed, and GDXJ even invalidated a small breakout
above one of the roundest numbers possible – the $100 level.
Both are sell signs. If GDXJ closes below $100 today (which seems
likely), this powerful sell signal will be complete.

The GDXJ closed yesterday’s session below $100, and the sell
signal was complete. The fact that it once again moved above $100 and
then back below in the first minutes of today’s session, further
confirms that “this is most likely it” for the miners.

Rising Wedge Breakdown

The additional – small yet big – signal comes from the
breakdown below the rising wedge pattern.

– It’s small, as the move below the wedge is not sizable yet.

-
It’s big because the rising wedge patterns are quite often
followed by vertical price drops, and given how extremely
overboughtminersare right now, this is exactly what could be in the cards.

Besides, gold
and silver
are reversing as well.

The invalidation is most profound in case of the GDXJ, but the
“reversal theme” is here.

This perfectly fits the bullish reversal in the USD Index, and the
fact that the latter survived even the U.S. gov’t shutdown.
The universally hated and beaten down U.S. dollar refuses to fall
further despite all that it’s thrown at it. This is exactly
the kind of behavior that we see at major bottoms.

And when the USDX finally rallies in a meaningful way, the price drops
in the PMs are likely to be epic.

This could be another trigger for a major sell-off in the stock market
as well, together with the two that I had outlined before:

Gold just moved to this level (precisely to $3,899.15) and then it
declined – erasing more than the entire overnight gains. This
happened while the USD Index was insignificantly down. Gold is
likely in the final blow-off part of thespeculative parabolic upswing, and it’s “doing its own thing”.

To be clear – gold didn’t permanently disconnect from
the USD. We simply have a moment where it’s moving “on
its own” as the rallying prices make it more attractive to
other buyers (that’s how investment goods differ from consumer
goods, which are less attractive to buyers when they are more
expensive). But once the parabola breaks, the slide can and is
likely to be huge.

And the decisively rallying USD Index is a likely trigger. There
can be more of such triggers, though, for example serious turmoil on
the job market. Those statistics triggered the 2020 sell-off, and it
seems to me that we’re going to see problems there due to
either (or more likely both) of the following:

– The AI revolution, which causesjob losses

-
The tariff hikes – their consequences are slowly creeping
up

The problem here is that while the job losses in 2008 were
temporary, the results of the above could be permanent or at least
of medium- or long-term importance.

As always, I’ll keep my subscribers informed.

Thank you for reading my today’s analysis – I appreciate
that you took the time to dig deeper and that you read the entire
piece. If you’d like to get more (and extra details not
available to 99% investors), I invite you to stay updated with our
free analyses – sign up for our free gold newsletter now.

Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®

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