Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]30-year Treasury Dec (USZ) Wednesday’s last-minute recovery was suspicious and needed some confirming price action Thursday. One example discussed was another dip under 133’06-133’08 support that also recovers into the close. That would have proved support was valid.
Instead, Thursday morning’s price action hovered optimistically above support. The problem was compounded by filling the gap back to Tuesday’s 133’22 close, and neutralizing its attraction. The bond was an easy target for sellers on the 30-year auction’s results, which triggered a spike down that ultimately settled under Wednesday’s lows.
There is no unfinished business above to attract price higher. Unless invalidated immediately by recovering 133’06-133’08, a Double Top is forming. The outstanding gap back down to 131’23 is attracting price down, although it is unlikely to offer anything more than obligatory support since it is the product of an excessively optimistic dip. The next major objective is essentially 130’20, whose break would put into play the outstanding 128’14 target.
Gold Dec (GCZ) Thursday’s gap up from Wednesday’s close around the 1370.50 target wasn’t likely to gain traction. In fact, the gap back to Wednesday’s close was filled. Nevertheless, avoiding a negative close does make the 1383.50-1388.10 overnight highs likely to be retested before the Complex Triangle’s 1326.00 lower-end is put into play.
Crude Oil Nov (CLX) The potential to retest the highs above 84.00 was fulfilled overnight. Intraday action Thursday didn’t retest overnight high, not that it needs to be. A close under 81.55 might be able to seal a top and reverse momentum down. Otherwise, still potential to probe 84.00 intraday.
Natural Gas Nov (NGX) Thursday’s opening gap down revealed a paradigm shift. Now the pattern was creating unfinished business above to help recover from lows. The pattern had entrenched a recovery by closing Wednesday above 3.65-3.67, which allowed room for selling to refuel buyers. In fact, the open’s dip to 3.59 was recovered back to 3.76. But that sold off to close within 3.65-3.67. A close above 3.76-3.77 would be credible for triggering a durable upleg.
Dollar Basket Dec (DXZ) Thursday’s gap down to new lows offered another case study in the consequence of a setup that doesn’t trigger at the close. An immediate session-long rally could have triggered a lengthy multi-week corrective bounce, but that door closed. Now a bottom must retest Thursday’s 76.66 opening gap after first bouncing to “higher prior lows” around 77.20-77.25. Otherwise, the downleg can extend.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).