NEW YORK ( TheStreet) -- The past couple of weeks I've been bombarded with emails asking if gold and silver have bottomed and if people should be buying more on these pullbacks. Those of you reading my work for the past few months know that my analysis clearly has shown how both gold and silver have been topping out. There has been strong distribution selling, and price patterns on the charts clearly signal a top is near. Here's an update on silver, gold and the dollar. Silver Daily Chart
Silver has formed a very nice-looking top and it is now trading under its key moving averages. It is also currently testing a key resistance level after Friday's bounce on the back of fears in Egypt. Unless something happens internationally, I figure silver will continue its trend down.
Gold Daily Chart
Gold is doing the same as silver, its little sister. I feel the general public is still very bullish on metals and before we see higher prices (new highs) the market will have to shake the majority out of their positions first. At this time gold, looks like it should test the $1,285 level. Depending on how long it takes to get there and the price action it forms in the following days, that outlook could change but expect sellers to step in at the $1,350 to 1,355 area.
The dollar has been grinding lower the past two weeks forming a falling wedge reversal pattern. It's also important to note that on the daily chart the dollar tested a key support level last week. This should be an interesting week for the dollar and the rest of the market simply because when the dollar makes sharp movements it pushes the price of stocks and commodities around in a big way. I'm looking for a multi-week rally in the dollar, possibly longer, but with small pauses or corrections along the way.
I feel gold and silver are nearing short-term resistance levels and will find selling pressure in the coming days only to continue on their journey down for a few weeks. The dollar, on the other hand, broke out of its falling wedge on Friday and could have a strong rally for two to three days. I feel most traders and investors have been shorting the dollar for two weeks straight so once they realize it's going higher there will be a ton of short-covering and the dollar should rip higher. This shift in the dollar to up from down has a direct effect on the S&P 500.