Also, the chart of $GOLD reflects that once the price drops between the 150 and 200 day MA, it does not retrace or double bottom, but rather just rises from there and goes on to form higher highs and higher lows.

I think gold continues rising from here.  $GOLD came very close to its 200 day MA today, and it appears to have completed a 3 wave counter-trend decline from August 22 in which it has lost nearly $400.  I have no plans to short gold or GDX anytime soon.

Also we have a cross of the 7 / 21 day EMA on GDX:GLD, which is bullish for GDX.

So far we have a similar bullish engulfing candle on GDX as well.

Matt,

If it plays out, this triangle would be a continuation pattern suggesting that the downtrend may resume, correct?

Ray

I wouldn't short gold at all here.  GDX is starting to outperforming GLD, which could be a bullish sign for the entire gold complex.

I may decide to avoid most of the long trades while we are in a confirmed downtrend.  It would be hard to get caught in a severe countertrend and exceed the stop-loss while the market is melting up, as opposed to "crashing" downwards out of fear.  The market often moves faster to the downside than the upside, since fear-based selling is more dramatic than greed-based buying.

I think you mean "Death Cross".

I don't think that is correct.  My understanding is that the system will occasionally take long trades when the overall trend is down, with SPY under the 200 day MA.

Looks more like the start of a Wave 3  up to me.

Shorting gold is quite a risky proposition in this market IMO.

I think that once the general market continues its bounce (hopefully later today or tomorrow), GDX will rise with it even if gold retraces some of its current climb, as investors will be anxious to take advantage of a dip in the gold price before it launches again.  That may cause the GDX:GLD ratio to climb which would confirm a potential buy signal on the GDX system

No, dollar opened down:

http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=f&a=&w=&v=i

Breaking news:

http://www.reuters.com/article/2011/08/07/us-crisis-ecb-idUSTRE7762PE20110807

Zerohedge will always put the most extreme bearish spin on every article.  And "Speigel" is not exactly the WSJ.  If you actually translate the Speigel article, it states that some financial experts in Germany feel that it is a bad idea to buy Italian bonds.  These are not necessarily the opinions of Angela Merkel and those who will attend the ECB conference.  I would be very surprised if Merkel did not agree to some type of plan tomorrow during the ECB conference call so as to calm the markets at least for now, especially with the US downgrade on the table as well.

Fed's Don Kohn just told the WSJ that the Fed may give serious consideration to QE3 as soon as its August 9 meeting, hence the gap up in SPY:

http://www.zerohedge.com/news/hilsenrath-feds-kohn-says-will-give-very-serious-consideration-qe3

Note that the 7 day EMA just crossed above the 21 day EMA for GDX:GLD.

Of course now that some are sitting out the trade, it will likely return 15%  :-)

But we aren't dealing with coin toss odds, but rather a system that normally wins 90% of the time.

Some of us apparently did not receive the email alert.  I received it but it came in to my inbox about 8 hours late.