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Daily Spot: Currencies – If, Then… Market Timing

Daily Spot: Currencies

By Rod David | November 22, 2010 - 5:33 pm

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

Dollar Basket Dec (DXZ) Friday’s delay in resuming the rally made sense after Sunday night’s dip on news of Ireland’s bailout. When Ireland’s deal seemed to flounder, the Dollar’s  recovery made sense since last week’s rally had been confirmed.

What won’t make sense is if new highs don’t print without delay. At least, it won’t make sense in the context of an ongoing rally. The recent breakout and confirmation are owed a fresh high. And it’s getting a little late for that fresh high to be assured of resuming the rally. It is risking being no more than a retest of the confirmation’s high, to form a Double Top.

Leaving the fresh high outstanding while price dips back into the prior consolidation could help to launch another rally leg. Overnight dips before Friday and Monday’s sessions did try as much. But the recovery potential is not helped by ranging narrowly intraday for another session.

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Gold Dec (GCZ) The lower-end of the 1365.00-1372.00 bounce target was met overnight within 20 cents Sunday night during the Ireland bailout’s initial currency moves. It was retested after Monday’s close. Revisiting it after the interim pushback suggests that the 1372.00 upper-end will be tested, too.

30-year Treasury Dec (USZ) The 128’14 bounce target was nearly met Monday. Its test remains likely.

Crude Oil Jan (CLF) Monday’s fresh low under 80.70 did offer an intraday buying opportunity, as 80.68 was recovered to 81.80. The consolidation is otherwise still in-play.

Natural Gas Dec (NGZ) Monday’s open often extends the character of Friday’s action in Natty Gas. The open’s gap up was entirely appropriate. The bullish scenario then required only a close above 4.17. In fact, its intraday dip recovered to new recovery highs. The next higher target at 4.40 is in-play so long as pullbacks hold 4.17 as support.

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

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