The USD Index is bottoming – check.

It moved to super-strong combination of long-term support levels – double check.

The USDX declined after Trump’s comments just like it had declined in early 2018 after Mnuchin’s comments (which led to a major bottom) – triple check.

But does it mean that the USD Index is done bottoming? 

No.

It could simply trade sideways for a while before soaring. In fact, there is a specific 3-4 year cycle in the USD Index that supports this scenario.

Let’s take a closer look.

Since the 2005 bottom (yes), the USD Index has been forming major bottoms every 3-4 years:

• 2005
• 2008 (three years later)
• 2011 (three years later)
• 2014 (three years later)
• 2018 (four years later)
• 2021 (three years later)
• (most likely) 2025 (it’s four years after the previous bottom)

Interestingly, in all those cases (except for the current one as the jury is still out here) it took a while for money to flow to the USD and for the bottoms to form. 

In 2005, the bottoms were 50 trading days apart.

In 2008, the bottoms were 86 trading days apart.

In 2011, the bottoms were 83 trading days apart.

In 2014, the bottoms were 137 trading days apart.

In 2018, the bottoms were 58 trading days apart.

This means that the 50-something trading day bottoms are normal, and so are the 80-something trading day bottoms. The 137 one or ones much shorter than 50 could be viewed as anomaly.

Right now, we’re 32 days after the first bottom. This is much shorter period than in all previous cases. This, in turn, means, that even if the USD Index is likely to rally from the current levels (and this very much IS the case – I view this as very likely), It might take another 18-28 trading days before the second bottom forms – this would be in perfect tune with historical norms. 

A rally that starts later than that would also be in tune with the above, but given the current geopolitical situation (tariffs are fundamentally positive for the USDX) and the stock market turmoil could start any day (which historically led to USD’s strengthening) it seems that we won’t have to wait too long for the USD Index’s rally. That’s why I’m leaning toward the analogies to narrower (if one could call 2-month bottoming process that) bottoms.

All this means that the USD Index could easily keep its super-bullish medium-term potential and still do nothing (trading sideways) for the rest of this month.

That’s what it’s doing today – moving back and forth again. The volatility is high in intraday terms, but low in in medium terms of weeks.

The USD Index once again moved below its 2023 low, and just like it was the case previously, it’s likely to invalidate this move lower as well. 

As the USD Index moved lower today, gold moved higher.

The breakout above the 61.8% Fibonacci retracement was successfully verified yesterday, so we could see another attempt to rally to $3,450, or perhaps even $3,500.

And while this may not result in strong gains in silver (due to reasons that I’m outlining in my today’s Gold Trading Alert), gold stocks could rally once again.

Getting back to USD Index’s back-and-forth movement, it might be tempting to view this as discouraging or boring, but I actually view it as informative. It allows us to monitor how gold and mining stocks react to this movement. Are they magnifying USD’s bearish signals or the bullish ones? The current indication is bullish – the back-and-forth in the USDX triggers gains in the miners, which are strong relative to gold.

When we see signals of weakness – and I’m staying alert – we’ll know that it’s time to take profits from the mining stocks that we have long positions in, but for now it seems that that they can rally further. In particular, one company rallied has such an extraordinary technical setup that it’s difficult not to get excited about it. Broken above key resistance, verified the breakout and it’s very strong compared to GDX on relative basis. It could rally even if the USDX does the same. And while it rallied right after we entered long positions in it, it looks like it could soar by another 25% (unleveraged!) before hitting our profit-take level – and while I can’t make any promises, this could happen as early as this month. 

Also, another company is most likely about to confirm its long-term breakout today, greatly improving its technical picture, likely resulting in a powerful rally (bigger than in GDX or GDXJ). I promised my subscribers an extra Alert before today’s closing bell, and I’m going to deliver.

Administrative Note Regarding a New Space

We just launched something to help deal with market volatility stress - a daily "memecons" (memes + economy) section where our community creates economic memes about real investor experiences.

This isn't about celebrating wins or losses - it's about finding humor in the psychological challenges we all face as investors. Whether it's portfolio checking addiction, Fed meeting anxiety, or just trying to stay rational during market chaos.

Let’s face it - investing is as serious as it gets. I’ve spent thousands of hours analyzing, researching, and writing on it, and I noticed that taking strategic breaks from the most serious and stressful activities helps to improve the efficiency of the work being done, and it also helps to handle the stress. 

Consequently, we launched this section which might help one to get a fresh look at the market situation after a break or to just decompress once the investment-related activities are done for the day.

Today's featured memecon captures something important: when you prepare for uncertainty (like keeping gold insurance which is also what I’ve been writing about for many years), you can stay calmer during system glitches, corporate collapses, and general market mayhem.

Also, sometimes laughing about the absurdity of markets is the best way to maintain perspective for long-term success.

If you’re interested, I invite you to check out today's collection and vote on your favorites. 

Thank you for reading my today’s analysis – I appreciate that you took the time to dig deeper and that you read the entire piece. If you’d like to get more (and extra details not available to 99% investors), I invite you to stay updated with our free analyses - sign up for our free gold newsletter now.

Thank you.

Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief