Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
30-year Treasury Dec (USZ) After Wednesday’s FOMC reaction triggered a 3-point dive, the drop’s momentum allowed room for a bounce up to 130’26. This bounce limit was exceeded, but not by a little. It was exceeded by so much that the drop’s entire direction was jeopardized.
The bounce ultimately tested 131’25, the original sell signal. It was still being tested at the close, which means it was not recovered despite being in position to do so. A bullish signal could have triggered, and did not, which is bearish. I would not step in front of further gains, but immediate weakness Friday would help to confirm the bounce had ended.
Thursday’s bounce might also be considered last-minute optimism ahead of Friday’s Employment Situation report. Closing back under 130’26 Friday would signal the drop’s momentum had resumed.
The next lower objective is 128’14. Wednesday’s low stopped optimistically short of probing the prior low. And a probe of prior lows was already a requirement since the 131’25 sell signal (boxed red) had already broken and been confirmed (circled red).
Dollar Basket Dec (DXZ) Gapped down Thursday, to new lows, and ranged entirely in negative territory. But the close was essentially unchanged from the opening print, so the pessimism was ineffectual. Since Thursday’s new low close is a breakout, and a lower close Friday would confirm, Thursday’s ineffectual pessimism suggests Friday’s close won’t confirm. So, new lows Friday will be extra vulnerable to recovering and reversing into positive territory.
Gold Dec (GCZ) Gapped up above 1366.00, filled gap back to 1372.00 and sliced through prior highs. New highs are not a sell signal, and the surge can extend higher, but Tuesday’s low stopped optimistically short of filling nearby gap and Thursday’s open created new gap back down to Wednesday’s close.
Crude Oil Nov (CLZ) Thursday’s new high fulfilled the Compelx Triangle’s target (depicted in yesterday’s chart), so the pattern is now free to Double Top with October’s prior high. Thursday’s close was essentially flat with the open, so any weakness would be credible for extending down.
Natural Gas Nov (NGZ) The fourth consecutive session held 3.83-3.84 support to maintain the corrective pullback. The open’s optimism ahead of EIA is fairly reliable for being reversed sharply. Thursday’s was, all the way back down to 3.74, but sellers did not gain traction as the close recovered 3.83-3.84. Still need close above 39.6-3.97 to signal momentum reversing up.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).