Daily Spot: Metals
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]Gold Dec (GCZ) Monday’s recovery from Sunday night’s dip had managed only to fill its gap back to Friday’s close. Any other attraction above did not require a retest. Friday’s gap had to be filled because Monday’s regular open had already recovered back above prior lows, so its gap down did not damage the chart.
That is not the case with Tuesday’s open. It did gap under prior lows (highlighted red). There is no requirement to fill the gap back to Monday’s close (circled green).
Tuesday afternoon’s bounce chipped away at resistance, which remained from the last gap up (circled red). A bounce back to Tuesday’s opening gap around 1359.00 (dashed line) is still attractive for refueling sellers. It could be probed up to 1363.00-1366.00 – any higher would make a probe of prior highs likely before a much bigger downleg begins.
30-year Treasury Dec (USZ) Tuesday’s open gapped down after Monday’s bounce, but rallied from there to close above Monday’s high. The bounce has room up to 133’08-133’10 while still refueling sellers for a much bigger downleg.
Crude Oil Nov (CLX-CLZ) Friday’s close under 81.55 (basis Nov) had signaled that buyers had lost momentum. Monday’s gap up above 81.55 made one more probe of 84.00 possible first, if not likely. Monday’s bounce, although sizable, stopped short of 84.00. But its drop to 79.37 Tuesday confirmed the past two weeks have been all about topping. I’m rolling coverage to the Dec contract, whose price is essentially 65 cents higher than Nov. So this downleg’s objective is “lower prior highs” down to 77.75 before at least a corrective bounce.
Natural Gas Nov (NGZ) I am rolling coverage to the Dec contract. Tuesday’s inside day developed within Monday’s range, which was itself a break to new lows. This setup does not give buyers traction. But it does not prevent a corrective bounce, whose 3.98 target would likely trigger a drop that retests Monday’s 3.85 low. A close above 4.05 before then would suggest a bigger bounce underway.
Dollar Basket Dec (DXZ) Monday’s session-long retracement from gapping up had suggested a retest of last week’s lows was in-play. Tuesday’s gap up above Monday’s high, and its session-long extension higher, don’t prevent that. In fact, there is now more room to absorb bigger selling pressure. More so, the pattern does confirm that whatever the path, a significant bottoming pattern has been forming.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).