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Market Analysis 1 Apr 2021

Apr 1st, 2021

Executive summary

The Dow Jones remains elevated and much the same as last week, as divergence and the rising wedge continues to threaten decline waiting to happen. This is supported by non-confirmation of the 3 main US indices and the waning of breadth and volume in the equity market. The continued titanic struggle to keep US markets elevated cannot continue for much longer and we continue to be positioned at the forefront of a long-term decline as the effect of numerous impacts continue to bore in and eventually collapse the structure.

US Treasury yields continue to rise but are close to a corrective reversal which promise a weaker US dollar, extended equity gains, and higher gold. A breakout in the gold / silver ratio promises lower metals which implies a stronger dollar and US equities are in a topping pattern. But higher interest rates are coming, no matter what: Despite world governments need to prevent it.
The dollar breakout and the EuroDollar breakdown are both building momentum which is likely to extend into multi-month phases. The Gold rally has faded and silver remains weaker than gold, as the breakout in the gold / silver ratio indicates weaker metals and miners ahead.


The Dow Jones remains elevated as the bearish patterns in the sell divergence and rising wedge remain active. This dichotomy is also evident in the non-confirmation of the 3 main US indices and the waning of breadth and volume in the equity market, as the titanic struggle to keep US markets elevated continues.

US Dollar

Multi-breakouts start to build momentum in dollar value as the rally continues. But we are getting closer to a corrective reversal before the strength phase continues to yet higher values. This is dependent largely on the potential US Treasury yield correction and US equity market decline, both of which could interfere with further dollar strength. Price has advanced through the 200-Day MA (green) without much of a pause, so there may well be further dollar gains first.

Long term data in the weekly 5 year chart supports the bullish dollar breakout as momentum builds, with corrective resistance a little way off still. The similarity with the breakout 3 years ago indicates corrections are soon but that the rally will prove to be long-lived.


EuroDollar behaviour supports the strong dollar rally as it builds momentum below the breakdown. The Euro appears more bearish than the dollar is bullish, with a pronounced decline through the 200-Day MA (green).

Long term data in the weekly 5 year chart indicates the EuroDollar in freefall as it more than mimics dollar behaviour in the opposite direction.

US Treasuries

US Treasury 10 year yield remains elevated in the rising channel as US equities remain elevated, spurred on by the gold cross (green square) indicating the move towards higher yields is real. The sell divergence is still active though and this indicates a potential for a reversal which has long since been indicated by long term data in the 5 year chart (not shown). We still need increased yields during the ‘acid test’ when equities are actually declining, and this has not happened yet.

The above chart illustrates the negative correlation between US 10 year Treasury yield and the gold price, in a 5 year daily view. Any sustained yield correction down now is likely to provide energy for a gold rally which is not happening yet. Much depends on the extent and timing of any US Treasury yield correction which will impact directly on US interest rates, dollar value, equity and bond market behaviour, and gold.


The Gold rally fades into a bearish decline below the H&S breakdown which indicates potential to drop all the way to about $1450. The potential corrective reversal in US Treasury yield could re-energise into a gold rally which could extend to $1750, but further declines are likely after that. The next H&S neckline will activate below about $1670.

South African Rand

The Rand is strengthening against a stronger dollar, in correcting down from dollar resistance and above that a region of strong resistance at the 200-Day MA (green). But this situation cannot last because it makes no sense, despite the potential for some dollar weakness (and further Rand strength) during a US Treasury yield corrective reversal to lower yields.

Longer term data in the US$zar weekly 5 year chart indicates the Rand moving sideways in a declining channel. This illustrates the likely dollar advance into a breakout of the channel and subsequent Rand weakness.

Hui : Gold Ratio

The HUI / Gold ratio is moving sideways into an approaching triangle vertex-based reversal. Indications for further sideways movement in the short term is strong followed by further declines thereafter. The MAs appear to be providing strong resistance.


The GDX breakdown from the H&S is holding with the ultimate final target decline price in the region of $22 / $23. Price is moving sideways with strong resistance from the MAs towards the approaching triangle vertex-based reversal. The chart remains bearish.

This situation applies also to all US miners, and HUI, GDXJ, and XAU are all positioned in likewise charts subject to further breakdowns.

Dust US Miners Bear Index

The Dust chart base breakout continues in a long time coming, and price is moving sideways towards the approaching triangle vertex-based reversal. The chart remains bullish.


The silver breakdown gains momentum as silver remains weaker than gold in a chart that looks bearish. As with gold, silver is supported by Treasury yield decline and retarded by dollar advance.

Gold : Silver Ratio

The gold / silver ratio advanced to 69.93 as the breakout holds. The chart is beginning to look as if it has bottomed which means higher ratios and lower metal prices ahead. Technically, the breakout of the declining expanding channel trendline has invalidated, although this may be short-lived.

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