6/24T12:06 US$ vs Gold

US$ vs. GOLD: Mixed signals...

The Fed meets today and tomorrow and I am feeling the need to hedge the CEF position.

If we take a long hard look at the US$ index we will have to admit that the momentum is positive. View the weekly chart of US$ index (0USDR) and you will see a clear positive trend in the MACD histogram as well as a breaking of the down trend in the stochastic. On the daily chart, you will see major positive volume in early June that would suggest a possible reversal is being attempted. A run up to the 200 day MA would not be out of the realm of possibility, bringing the index to $75+ and at the same time breaking the long term downtrend that crosses over at $74.5.

The question is: Will the Fed meeting produce enough positive news for the US$ to create this breaking of the downtrend? The US$ is in a technical position to allow it to move higher with ease, so I feel we need to be cautious. Meanwhile, we need to look at the charts of GLD and SLV to see if there is any warning signs.

Both charts gave a negative sell signal yesterday on the 60 min. charts. As for the daily charts at best we would call it neutral and in reality all but the MACD are negative and the MACD is neutral, could go either way. This picture leads me to believe that the assets could be vulnerable to a sell off back to their lows as the US$ rallies to the 200 day. I don't want to live through that at the end of the month and quarter. The prudent move is to hedge off the whole position until such time as the metals break their down trends (GLD above $90, SLV above $175) or the technical picture changes for the positive. I would also watch the US$ index for a breakdown below the 50 day ma @ $73 to warrant a cover of the hedge.