The Venture snapped a 4-session losing skid today with a gain of 4 points to finish at 548, its EMA(8) which is also just 6 points below important resistance at the EMA(20).

This is a critical week for the Venture and all markets, for that matter, given Thursday’s much anticipated Fed policy statement and Janet Yellen news conference.

Most of the indicators on John’s 4-month daily chart for the Venture remain encouraging.  Below are some key takeaways:

1.  Key resistance remains the EMA(20), currently 554, and the 560 level.  A confirmed breakout above this resistance band would give the Index fresh momentum – it would also verify that the Venture is in the midst of a significant rally;

2.  RSI(14) has climbed out of oversold conditions which it had been trapped in since the beginning of July.  It’s currently at 42%, ticking slightly higher after today’s trading;

3.  Low bullish cross forming in the SS;

4.  The recent bearish trend (ADX indicator) has weakened dramatically since the August 24 low;

5.  Fib. support at 515 has held – on a monthly basis, Fib. support around 560 also held in August.  One cannot rule out the possibility of a double bottom at the 515 Fib. level;

6.  Fib. resistance above the EMA(20) starts at 586.

If the Venture pushes past 560 on a closing basis on increased volume, that will be the signal for longs to really get aggressive – keeping in mind the need to focus on the “leaders” of the market.

More than ever, the Venture needs a fresh grassroots discovery in Canada.  Two immediate possibilities on the horizon – Equitas Resources‘ (EQT, TSX-V) exciting Garland Nickel Project near the Voisey Bay’s mine, and Garibaldi Resources‘ (GGI, TSX-V) vast Grizzly Central area in a district where a second deposit has already been found and more appear to be a virtual certainty.

Note:  John and Jon both hold share positions in EQT and GGI.

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6:00 am Pacific

With a much anticipated fresh Fed policy statement coming Thursday, this should prove to be a critical week for the greenback.  The U.S. Dollar Index, a very crowded trade for more than a year, continues to look increasingly weak and vulnerable.  That’s an underlying positive factor for the Venture and commodities in general which often move in the opposite direction of the dollar.

The consistent position we’ve maintained over the last several months is that the Dollar Index hit its 2015 high during March-April based on what has proven to be, so far at least, a very reliable 9-month daily chart.  Fundamentally, a runaway dollar would not be healthy for the U.S. or global economies, so one can be certain the Fed is keeping a close eye on movements in the greenback (the Chinese appear to be, as well, and recently of course fired some critical shots in the latest currency war).

Dollar Index 9-Month Daily Chart

As you see can see in this chart, trouble began for the Dollar Index in late April when it broke below an uptrend line in place since last summer.  It found support at the 93 Fib level before rallying and reacting at the top of the uptrend line (fresh resistance) at the end of May.

Another uptrend line formed from the May low but that was broken as well in August.  Again, a rally took the Index recently to the top of that uptrend line, only to meet more stiff resistance.

RSI(14) is also running into a wall at the 50% level and has formed a bearish “M”.  This just isn’t a healthy-looking chart.

Despite these technical warning signs, there are still many bulls in the dollar camp as it remains a crowded trade.  The potential exists for a serious unwinding of the greenback over the next few months after the record run that started in the summer of last year.  This could mean a drop to about 88 which would be very supportive of commodities.  That’s not a mainstream view at the moment, but quite often the market is full of surprises – significant dollar weakness during the final quarter of the year could catch many traders and investors off guard.

As of 6:00 am Pacific, the Dollar Index is up one-fifth of a point at 95.34 after falling below Fib. support Friday at 95.42.

Euro 1.5-Year Weekly Chart

While the Dollar Index is showing weakness, the euro continues to gather strength.  Recently, it broke above a downtrend line in place for more than a year.  A DI cross confirms a trend change to bullish, and RSI(14) is also attempting to break out above previous resistance at the moment.

The euro is climbing an uptrend line and is also powered right now by a rising 50-day moving average (SMA).  Key resistance is 115.  If the euro pushes above 115, it could really gather some steam and that in turn would weigh on the dollar.

The euro is trading at 113, off one-third of a point, as of 6:00 am Pacific.

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