Grab Your Magnifying Glasses For This One

JC Parets
October 7, 2020

From the desk of Tom Bruni @BruniCharting

For our timeframe, we prefer to look bigger picture and not get caught up in the day to day noise.

That's why we have our Monthly Candle Strategy Sessions and Monthly Conference Call where we focus on the broader themes and how to take advantage of them in the market.

One of those themes we've discussed ad-nauseam is the "reflation trade", so today we're getting our magnifying glass out to look at a few daily charts that suggest more trouble/volatility could be ahead for cyclical assets in the near-term.

Here's a US Dollar Index daily chart. It recently broke out of an 8-week base and is stabilizing at the breakout level. Stabilization and a continued counter-trend move towards 96 would be a big deal for risk assets.

Click on the chart to enlarge view.

Here are the Gold and Silver Miners retesting their breakdown level, with today's action being the start of a potential "bear flag" continuation pattern to the downside.

And the bounce in Silver and Gold has also been tepid, to say the least.

So far it looks like the US Dollar wants to bounce off this support level like a springboard and continue its counter-trend move towards 96.

Whether or not that happens remains to be seen, but it's certainly something to be aware of given how cyclical assets have behaved in the face of Dollar strength.

As always, thanks for reading and please let us know if you have any questions!

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