Gold bull: breakout or serious test coming?

Most of the gold indices have gained close to 100% since the bottom had been hit at the end of March 2020. During the same period, the price of gold moved by about 20%. Since mid-April, the price of gold is moving sideways in a tight range while most of the gold indices have painted small HandS peak formations or bull flags. We are entering the phase where the new medium-term trend will be revealed. I am 100% long since 1st May and becoming a bit anxious that we might see a more serious pullback to ease the excessive bullishness before the new rally starts.

USERX

After the crash USERX managed to climb back into the rising trend channel that started back in Oct 2019. Along the way, it managed to produce a new bull signal which I described as potentially weak due to some structural disadvantages. It has been 34 trading days since that signal was produced and the price is only 3.52% above the entry price so my skepticism was justified. To sell the signal USERX needs only a 4.4% drop by Wed next week. Last Friday a short term buy signal was generated and this signal could have marked the low for the ongoing correction.

If the current correction continues there will be a lot of support underneath. There are 35-39 and 218-222 echo as the first support, then there is the uptrend line which started from the bottom of Oct 2019. Also, there is the horizontal support that has developed during the first months of 2020 and as the final support, there is the 218-222 echo. My general stop loss is the 218-222 sell not the 92-96 sell.

HUI gold index 

HUI is currently on a short term buy signal and also it is touching the uptrend line that has emerged from the bottom of the crash. If the support is going to hold the time to move is now. If this support gives up there is a 5-10% space for a drop to touch the 92-96 echo. There is much more space to breathe than in USERX, the price can go down as far as 235.00 and not damage a bullish picture. If this move happens technically it will look like a test of the May breakout.

XAU gold index

Same as HUI the setup is there to drop and touch the 92-96 echo. Also, there is an active 16-20 buy to support an immediate move up to avoid all problems. 

I didn't mention it before but the top formation looks like an HandS top with the target around 100.00 if the neckline is breached. 

GDX gold etf

Same as HUI the setup is there to make a move to touch the 92-96 echo. The top formation looks like a HandS top with the target around 28.50 if the neckline is breached. If the trendline is going to hold the time to move is now. The 16-20 buy generated 6 days ago might help to do exactly that.

GDXJ - junior miners

Same as USERX, a bullish flag has developed over the last two weeks and an imminent 16-20 buy might help to overcome the current resistance. If the support is broken then 218-222 needs to hold till the first week of July to sell and rebuy the 92-96 and transform it into a properly constructed bull setup.

GLD - gold etf

GLD is a bit different animal than the USERX. It is moving sideways since the mid April and is currently bumping against the major resistance around 165.00. Last Friday the 35-39 buy signal has been generated for a potential assault to challenge the resistance. The only thing missing now is the 16-20 sell to mark the breakout. If this happens a quick move to 174.00 should happen. 

A 35-39 sell would probably mean a quick drop to test the 92-96 support which would present serious trouble for the gold shares. 

SLV - silver etf

Silver is currently up against some serious resistance. It needs to hold above the 35-39 till mid July to transform the setup into a true bull.

TLT bonds
TLT has been in a correction since the end of April. Currently, it is pushing against it and it needs to buy back the 35-39 echo to enter the blue sky territory. 

UUP
UUP definitely seems like it is breaking down but in the last six months every time it produced a significant signal it was inverted. The current double sell 92-96 and 218-222, which is as bearish as it gets, has come at the apex of the converging triangle and so far has marked a low. It will need to replicate the last March kind of recovery to whipsaw the signals again. If this happens I suspect we could see a similar style carnage in the general market too.  

Bitcoin
After the most amazing recovery performed over the last four months, bitcoin has generated a strong well constructed true bull 92-96 signal. The chart is bullish in all timeframes. 

Inflation
The inflation chart has made some progress over the last two months but there is still no evidence that inflation is playing any significant role in the current markets. Deflation still rules.

I am 100% long and waiting for the next move, hopefully to the upside. I wouldn't be surprised to see a further 10% drop in gold stocks. My general stop loss is 218-222 sell.

Good luck to everyone,

Branko