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Daily Spot: Currencies – If, Then… Market Timing

Daily Spot: Currencies

By Rod David | May 31, 2011 - 4:32 pm

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

Dollar Basket Jun (DXM) Momentum of truthiness. The recent drop’s moment of truth began with Monday night’s test of 74.75 as support. Repeatedly testing it intraday never gained traction to extend down. But neither was its testing recovered. A second consecutive lower close Wednesday would be credible for signaling a much bigger downleg underway. Avoiding a lower Wednesday would maintain the potential for retracing back up to and through the pullback’s ~76.50 origin.

Gold Aug (GCQ) Losing sponsorship as the bounce progresses. Tuesday’s fresh high attacking 1542.00 closed back under last week’s ~1540.00 high. Its pullback didn’t dip under 1531.00, whose break would signal momentum reversing down, confirmed under 1528.50. The bounce’s 1558.00-1550.00 target otherwise remains in-play, next confirmed above 1544.00.

30-year Treasury Jun (USM) Inching higher, almost literally. Tuesday morning’s dip down to 125’11 was recovered to probe fresh highs above 126’00. That was by mid-morning. The balance of the session eked narrowly higher. The pattern’s potential up to 126’30 remains alive, albeit not yet with any reliable path. But now pullbacks have room down to only 125’11 before the rally would lose traction.

Crude Oil Jul (CLN) Pent-up buying pressure releases steam. Gapping up Tuesday to 102.50 was entirely appropriate for having ranged narrowly just under 101.50 resistance through Friday. By not spiking up, an Island has potential to form by gapping down back under 101.50. Otherwise, a fresh high would still target a probe above 104.50, where a bigger downleg would be likely.

Natural Gas Jul (NGN) Continuing the power play. Friday’s test of the 4.55 target was not corrected before extending higher Tuesday to 4.70. In fact, the rally gapped and then extended higher, reflecting a lot of optimism. But the next higher target at 4.80 remains in-play, so long as pullbacks hold any test of 4.55 as support.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Weekender (Fri).

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