Daily Spot: Currencies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Dollar Basket Dec (DXZ) Monday’s open gapped up above 77.00, whose recovery would signal momentum reversing up. But the balance of the day only ranged narrowly around 77.00.
This doesn’t really fulfill the spirit of triggering 77.00, since the close was essentially flat with the open. Sound familiar? This is identical to Thursday’s “ineffectual pessimism” that gapped down to new lows.
The similarity makes the entire three-day sequence one singular pattern. Rather than reversing up without delay, a little more backing-and-filling becomes likely. Closing higher Tuesday might get a benefit of the doubt if an intraday dip were absorbed in the process.
Regardless, simply having gapped up Monday was enough to confirm that last week’s dip was about fulfilling selling pressure, rather than sellers gaining traction for a new downleg.
Gold Dec (GCZ) Extended higher after an opening dip that had put only minimum pressure on buyers, so the intraday recovery was the product of impatient buyers. A dip to 1380.00-1381.00 would have been more constructive. So, extending higher to 1420.00-1421.00 first would be that much less sustainable.
30-year Treasury Dec (USZ) Monday was essentially an inside day. It was not an inside day that trended down, despite trending down exclusively after the open’s surge. So it was really a non-event which doesn’t change, affect or alter the prevailing pattern. Still looking for a probe under last week’s low and the prior week’s low. And for all its delay, that probe is likely to be in the form of a new downleg.
Crude Oil Nov (CLZ) Friday had a chance to reject Thursday’s test of the 86.45 area’s target. It didn’t, and went out higher into the weekend to all but ensure higher highs Monday. And higher highs all but ensure the next higher objective is in-play at 88.45. A gap down might gain traction, but the presumption otherwise is that this upleg’s momentum remains intact.
Natural Gas Nov (NGZ) The 3.96-3.97 buy signal was already being probed overnight Sunday after Friday’s bullish intraday recovery. Monday’s open got through it nicely, and extended higher to a new recovery high close. The prior leg’s 4.17 target tested at the previous high might produce some obligatory resistance if retested. So long as 3.96‘s recovery is not rejected Tuesday and a higher close confirms Monday’s breakout, 4.40 is in-play.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).