Gold Breaks Up

SPX closed at the 100 DMA, the higher resistance level I gave yesterday morning. This is an obvious point of failure and we could well see that failure here. A break up over the 100 DMA opens the way to a likely test of last week's highs and the upper bollinger band in the 1380 area:

On the 60min ES chart we're seeing resistance at 1360, which has been a significant support and resistance level in the last few weeks. Again a break over with any conviction would strongly suggest a test of last week's highs:

This is a very important area for both equities and USD. A break over here opens up the possibility, absurd as it seems given the earnings and economic backdrop, that the bullish rectangle scenario that I outlined earlier this week on ES might play out. On USD the plunge yesterday took USD to rising support from April. A break below suggests another test of the IHS neckline in the 81.5 area and leaves an ominous setup of a marginal high and short-lived break over strong resistance on sharp negative RSI divergence on the USD daily chart. You can see the importance of this level on both EURUSD and GBPUSD as well and on balance I would expect this to hold:

Gold broke up from the symmetrical triangle yesterday and, if this isn't one of those false breaks which make triangles very treacherous, the obvious upside target is at declining resistance in the 1680 area, with very significant resistance on the way at the 150 DMA in the 1640 area. There is the possibility IMO that we are watching the start of a big bull run on PMs so watch this space:

The silver chart is worth showing here too as silver is testing the 50DMA, which has been very important as support and resistance. If this isn't a false breakout on gold then silver should break over that shortly:

Earnings have been disappointing so far, and that was expected given the stagnant revenue reports last quarter. The fundamental economic backdrop is weak and getting weaker. If Draghi was in charge in Europe then we might see a rally based on him papering the world with freshly-printed Euros, but he isn't in charge. Merkel calls the shots in Europe and she has to answer to a German public firmly against any such action. I'm treating this move as just being another rally until demonstrated otherwise.