Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
30-year Treasury Jun (USM) The wrong time for a rally to pause. Thursday’s open spiked up to fill the gap back to Tuesday’s close. That was an appropriate way to exit Wednesday’s narrow inside day. Then the gap’s resistance pushed back. That was an inappropriate way to resume Monday and Tuesday’s rally. There is now no unfinished business above. Extending the rally higher immediately would get a benefit of the doubt for targeting 122’02. Closing under 120’25 would trigger a sell signal, confirmed under 120’16, targeting 117’00.
Dollar Basket Jun (DXM) Still gapping down. Wednesday’s narrow ranging at new lows could have formed a bottom Thursday, or even could have gapped up to form an Island reversal. But Thursday gapped down to another new low. Two consecutive gaps down are unlikely to resolve in an Island Reversal. And the gap above creates extra resistance to inhibit a recovery. While a bottoming pattern could still form, beginning the process immediately would still not completely form the bottom until Tuesday’s close or Wednesday’s open. Only a steep spike up could generate momentum and gain traction for a multi-session rally.
Gold Jun (GCM) More signs of distribution. Although Wednesday’s “ineffectual optimism” did not immediately launch a new downleg, Thursday’s price action continued to reflect buyers losing momentum. Overnight highs up to 1509.60 were retraced back under Wednesday’s high, whose resistance wasn’t probed until the afternoon. Each probe was retraced back under Wednesday’s high. It’s just more of the same: Gapping up, ranging exclusively in positive territory and probing prior highs (optimism) without closing above them (ineffectual). And now another gap below is outstanding, back to both Wednesday and Tuesday’s closes. But a close under 1498.00 is needed to signal that momentum is actually trying to reverse down.
Crude Oil Jun (CLM) The safety net is gone. The bounce’s 111.65 target met Wednesday did need to be probed further, and its probe did not gain traction. RSIs diverged negatively into overnight higher highs at 112.48, pushing price down into Thursday’s open. Although Thursday’s session firmed, it closed under the overnight highs. That might be more of the same constructive pessimism that kept the rally alive after Wednesday. But closing back under 110.50 would signal that momentum was reversing down, presumably to begin a much bigger downleg than the prior one from 113.00.
Natural Gas Jun (NGM) Climbing a wall of worry. Wednesday’s second consecutive close above 4.29 got a benefit of the doubt for being a confirmed breakout. Thursday’s higher highs at 4.47 removed some of the doubt. Closing above 4.55 would signal the rally was extending higher, so long as pullbacks were to hold any test of 4.44 support.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Weekender (Fri).