Don't Ignore This Chart

Gold Miners Lose Price Support On Heavy Volume

The Dow Jones U.S. Gold Mining Index ($DJUSPM) held price support on its late-September swoon, but that was not the case with the recent selling.  The reason?  It's probably the reverse head & shoulders breakout on the U.S. Dollar (UUP).  A rising dollar normally sends gold prices (and gold miners) lower.  Check out these recent technical developments:

I'd be very careful with gold ($GOLD) and gold mining stocks unless, or until, neckline support on UUP is lost in the 24.40-24.50 area.  This reverse head & shoulders pattern is a bottoming formation for the dollar and Thursday's breakout action confirms it.  If the dollar continues to rise - as the reverse head & shoulders pattern breakout would suggest - I'd look for further weakness in gold miners.

Happy trading!

Tom

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