Daily Spot

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Gold Dec (GCZ) Gold’s chart is offering a chance to learn something interesting about Head & Shoulders patterns. Their breakouts from don’t always reverse the trend. Sometimes they extend the trend – at least, initially. The reversal eventually comes, after many chartists have stopped considering the pattern.

When a Head & Shoulders breaks higher, first, its minimum target is a 100% swing. I calculate this from the pattern’s left shoulder and its right neckline (annotated on the accompanying chart). It has potential to a 200% swing.

Since meeting its 100% swing target at 1273-1274, Gold’s December futures ranged flat to higher, until Tuesday’s steep surge to 1289.40 in reaction to the FOMC news. A dip back down to 1273-1274 was needed to launch the surge. The steep surge extended to 1292.40 and nearly fulfilled the pattern’s 200% swing target around 1295.

Regardless, the multi-session consolidation around 1273-1274 didn’t create a solid base to launch a durable upleg. Despite probing the prior session’s high intraday, each close is back within the prior session’s range (also annotated on the accompanying chart). Pushing price higher grudgingly tends to be an accident waiting to happen.

30-year Treasury Dec (USZ) Knee-jerk reaction down on FOMC news avoided breaking under last Wednesday’s 130’15 low, which would have resumed the decline. A bounce to higher highs nearly filled a two-week old outstanding gap back to 132’08, while testing higher prior lows. The bounce has room to 132’16 before signaling a bigger bounce targeting 132’28 and 133’20.

Crude Oil Nov (CLX) Closed down decisively to signal the corrective bounce has ended.

Natural Gas Oct (NGV) Already bouncing, too soon to be credible. Extending higher Wednesday to fill the gap back to Friday’s 4.19 close would be very vulnerable to another downleg.

Dollar Basket Dec (DXZ) The “Complex Triangle” pattern broke lower through its 80.92 target and aiming for 80.28, where the pattern has potential to react up sharply.

[/pay]

Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…

Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Dollar Basket Dec (DXZ) Last Tuesday’s confirmation of Monday’s break allowed room and time for a bounce to refuel sellers. A gap above 81.50-81.65 signaled the bounce underway. The delay has been more of a consolidation than a bounce. It even included an overnight probe of fresh lows.

Absent overnight data, the pattern may be forming a Complex Descending Triangle (red outline). A break lower would target 80.92, and potentially 80.28, being vulnerable to reversing up sharply from either.

Regardless, last week’s overnight low at 81.07 should attract price down for at least a retest. A break higher first would be possible, but unlikely after consolidating a two-day trend for nearly a week.

30-year Treasury Dec (USZ) Monday’s inside day gapped up into last Wednesday’s range, then filled the gap back to Friday’s close. No trending ahead of Tuesday’s FOMC announcement.

Crude Oil Nov (CLX) [$1.31 premium to Oct] Monday’s rally probed Wednesday’s range from below by mid-morning. The balance of the session ranged sideways. Probing a fresh high above 76.85 Tuesday and reversing to close under 76.50 would end the corrective bounce.

Natural Gas Oct (NGV) Thursday morning’s drop back to prior lows was retraced entirely Monday, this time to a fresh low. Thursday’s drop had recovered too quickly, but not this time. An immediate recovery would not be credible.

Gold Dec (GCZ) Three consecutive higher closes, and three consecutive higher intraday highs, each have closed under the prior session’s prior high. Buyers aren’t gaining traction. Monday’s “ineffectual optimism” reflected the same.

[/pay]

Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…

Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Dollar Basket Dec (DXZ) Thursday’s close at or under 81.50 seemed a little premature. In fact, Friday ranged sideways. The consolidation isn’t required to last any further, but the decline’s resumption Monday would be unusual after not trending Friday.

30-year Treasury Dec (USZ) Thursday morning’s break under Wednesday’s range had not gained traction. Friday’s open gapped up back into Wednesday’s range, but settled essentially unchanged. The decline is free to resume.

Crude Oil Oct (CLV) Prospects for another corrective bounce leg are all but gone after Friday’s decline back to September’s lows. A close back above 74.55 might be able to gain traction, but otherwise 71.40 is next targeted.

Natural Gas Oct (NGV) Thursday morning’s retest of recent lows stretched the rubber band to create buying pressure. It could have compounded if left pent-up overnight, but it was fully exploited that afternoon. Friday’s dip may have corrected it, and back above 4.09 would resume the rally.

Gold Dec (GCZ) The week ended with another “ineffectual optimism” session. Thursday and Friday each gapped up, probed fresh highs, and ranged exclusively in positive territory. Thursday held the same resistance that was tested Tuesday, while Friday closed within Thursday’s range. It’s not a sell signal, but it does reflect the weak-handed sponsorship of this move.
[/pay]

Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…

Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]30-year Treasury Dec (USZ) Thursday’s econ reports exploited a weakened pattern. The prior day’s ranging had neutralized both freshly created gaps, without triggering a break either way. Typically, gapping beyond the range is required to resume trending. An inside day would otherwise be likely.

But Thursday’s open dipped and the morning dived, trending back down to Monday’s low. Monday’s entire Key Reversal setup has been retraced. They always are – and sooner, rather than later, when they try extending higher immediately as this one did Tuesday.

Thursday’s fresh low was also a new low close. But the closing bars were still overlapping prior lows. It’s not clear that sellers have regained momentum. A bounce back to higher prior lows at 130’16 is possible. Closing under 129’18 would signal the downleg had resumed.

Crude Oil Oct (CLV) Thursday’s open gapped down to immediately retrace Wednesday’s session-long rally off the open’s gap down. The morning slid to fresh lows. The balance of the session consolidated, and a close back above 75.00 would trigger another bounce leg. Closing under 74.15 would indicate that a downleg was already underway.

Natural Gas Nov (NGV) Prior lows were attacked, but not probed under 3.85. This still neutralized the rally that wasn’t gaining traction. The afternoon already rallied back to and through Wednesday’s 4.05 high. Now RSIs are diverging negatively, so the rally’s health depends upon extending higher without delay.

Gold Dec (GCZ) Not having reacted down much from Tuesday’s test of its 1275.00 target, Thursday’s open gapped up to retest it. The entire session was spent ranging in positive territory, probing fresh highs. This excessive optimism helps to rob buyers of their traction, and now a break under the 1265.00 interim low would be bearish.

Dollar Basket Dec (DXZ) Despite dipping back under 81.50 intraday, it held on a closing basis. Back above 81.65 would confirm the decline’s delay will extend into Monday.

[/pay]

Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…

Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Crude Oil Oct (CLV) Friday’s rejection (highlighted green) of Thursday’s rejection (highlighted red) should have bought time for firming further into Wednesday morning. Instead the pattern’s initial follow-through was retraced through Wednesday morning.

Having turned this cycle on its head, a bounce from Wednesday’s 74.65 open became likely. The entire session trended up to confirm.

So long as pullbacks now hold 75.45 as support, the bounce can extend higher to test 77.20-77.50. Any higher would then target 79.25 and 80.05 before a more substantial downleg would begin (i.e. the prior downleg would resume).

Natural Gas Nov (NGV) The bottoming pattern forming since August’s low has already tried to launch a recovery. It began with last Thursday’s test of the range’s 3.70 low. It continued with Friday’s gap up, that extended higher to fill the prior week’s outstanding gap at 3.93.

Each of the three successive days probed higher highs (circled green). Each session’s higher close (highlighted green) was within the prior day’s higher high. This leaves the pattern vulnerable to a quick corrective dip back to the range’s lower-end towards 3.80.

Extending higher without first correcting would next target 4.10 and 4.35. Regardless, the two-week long bottoming effort did just that, and any attack on it or retest of it would likely hold.

Gold Dec (GCZ) Not much ranging since Tuesday’s high tested 1275.00 resistance. Which also means no immediate close back under either of the two prior highs.

30-year Treasury Dec (USZ) Wednesday’s gap down created a gap back to Tuesday’s close. An intraday bounce essentially filled it, neutralizing its attraction. This created a gap back to the open, which was filled that afternoon without closing lower. The inside day requires gapping open beyond either end to resume trending.

Dollar Basket Dec (DXZ) Wednesday’s confirmation of Tuesday’s break allowed sellers to refuel with a bounce. BOJ Yen intervention obliged. The close above 81.50/81.65 suggests the pause will extend into Friday.
[/pay]

Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…

Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).