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Daily Spot: Currencies – If, Then… Market Timing

Daily Spot: Currencies

By Rod David | September 27, 2010 - 5:33 pm

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

[pay]Dollar Basket Dec (DXZ) The Complex Triangle pattern’s break lower was never retraced above a buy signal. But a brief consolidation resolved down sharply Friday, gapping down and extending to new lows.

Friday breakouts don’t often gain traction. In fact, despite probing a fresh low, Monday’s session closed back above Friday’s low. And the fresh low was early enough to have plenty of time for extending down if that were its intent. Fresh lows could still be probed, and a lower close Tuesday would set-up another fresh low Wednesday.

A close above 79.94 would begin to signal momentum reversing up. Other hurdles would need to be overcome on the path to recovery. But a valid recovery would overcome them quickly on the way back to the triangle’s 82.00 high.

Gold Dec (GCZ) Inside day Monday, didn’t even probe fresh high while dollar probed fresh low. Still behaves more like distribution than either accumulation or trending. But not rejecting the 1300.00 round number suggests it will at least be probed.

30-year Treasury Dec (USZ) Bounce targeting 132’28 gapped up to within ticks of the objective Tuesday. The balance of the day was spent trending up within Thursday’s range – essentially an inside day biased upward. Now a gap is outstanding back down to Friday’s 131’25 close. The optimistic hovering above 131’20 should at least be probed as support.

Crude Oil Nov (CLX) Friday’s recovery above 75.65 initially extended higher to probe 77.00. Subsequent dip held test of 75.65 as support. Unless 75.65 were broken quickly Tuesday to extend down in decline’s resumption, the rally should resume early, targeting prior highs and higher.

Natural Gas Nov (NGX) Underestimated the negative consequences to last week’s excessive optimism. Prolonging the basing for another upleg, and requiring more trapped sellers is an understatement. Monday’s open gapped down sharply below all prior lows. No rally would be credible anytime soon.

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

Posted in Daily Spot