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The U.S. Dollar, Gold, and Silver

The U.S. Dollar broke down from its Rising Bearish Wedge pattern, which raises the probability that the A-B-C wave (2) upward correction is over. Confirmation that wave (3) down has begun would come from a decisive drop below the bottom boundary of the Wedge, below 88. The first downside target would be the point where the Rising Wedge began, around 81.5. That could be an orderly stopping point for the first leg of (3) down, Intermediate degree 1. Eventually, wave (3) should take the Dollar at least into the 60s. That implies a Dollar devaluation event of some sort. Or, a lot less buying from foreign Central Banks, especially now that China is pegging the Yuan to a basket of currencies, not just the U.S. Dollar. Momentum is down as the MACD drops from a level where the prior two tops occurred. The RSI is neutral.

The above chart shows the pattern for Gold. Gold has reached the upper boundary of the Symmetrical Triangle pattern. It would be natural for resistance to hit here, but once Gold breaks above that boundary - and the Symmetrical Triangle pattern suggests it will - Gold is clear to rally into the high 400s. The upper boundary of its long-term trend channel is above 500. Once Minor and Intermediate waves five of primary (1) complete, an A-B-C correction lower is probable. How low that correction takes Gold will depend upon how high it rallies over the next several weeks and months. If it were to correct now, a 38.2 percent retrace would target 375ish.

The next chart shows Silver, which was down this week, however the Elliott Wave count as labeled still suggests an upward thrust is near. As long as Minor degree wave 2 down of the five-wave impulse we expect for wave 5 of (1) up does not drop below the bottom of e, the above count remains valid. There is also a Symmetrical Triangle pattern that is a continuation pattern of the prior trend. A decline decisively below 6.90 would cause this pattern, and the Elliott Wave count, to fall apart.

It is very rare for a Symmetrical Triangle pattern to fail. It is a continuation pattern that suggests the direction of prices before the pattern will be the same as after - in this case up. Should Silver drop decisively below its moving average lines and the bottom boundary of the Triangle pattern, we will turn Bearish, and consider wave (2) down's correction is underway.

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Since 1999, this has not been a buy and hold stock market, not with the S&P 500 still down 21 percent, the Dow Industrials still down 10 percent, and the NASDAQ Composite still down 58 percent, and the NASDAQ 100 down an exact 67 percent -- over the past six years. No, it is a timing stock market, a trader's market, and that looks to be our future. In this stock market environment, to make money, good buy/sell signals are critical.

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"Have this attitude in yourselves, which was also in Christ Jesus,
Who, although He existed in the form of God,
did not regard equality with God a thing to be grasped,
but emptied Himself, taking the form of a bondservant,
and being made in the likeness of men.
And being found in appearance as a man, He humbled Himself by
becoming obedient to the point of death, even death on a cross.
Therefore, also God highly exalted Him,
and bestowed on Him the name which is above every name,
at the name of Jesus, every knee should bow,
of those who are in heaven, and on earth, and under the earth,
And that every tongue should confess that Jesus Christ is Lord,
to the glory of God the Father."

Philippians 2:5-11

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