Daily Spot: Metals
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Gold Dec (GCZ) Monday morning’s dip was too shallow to refuel buyers. Extending down to 1380.00-1381.00 (red line) would have trapped shorts for a more durable upleg. That didn’t prevent the session’s recovery from extending higher Tuesday. But it did prevent Tuesday’s higher high from gaining traction.
The 1420.00-1421.00 target was met overnight, and had pushed back down before the Tuesday’s open. RSIs diverged negatively when it was retested intraday. Eventually the Dollar’s recovery and rumblings about reducing the size of QE2 weighed heavily. Te last hour plunged $18 to 1405.60. Post-close action dived another $23 to 1382.20.
This may constitute the 1380.00-1381.00 pullback to allow a retest of Tuesday’s 1417.80 opening gap up (circled green). So long as 1420.00-1421.00 is not recovered, a drop from there would be expected to gain traction for a bigger drop targeting 1338.00-1342.00 (circled red) and new lows under 1320.00 (highlighted red).
Dollar Basket Dec (DXZ) A dip back into Friday’s range to test 76.65 as support was preferred before recovering to signal a rally leg underway. Tuesday’s dip was shallower than preferred. But it did probe under Monday’s lows before recovering back above Monday’s highs, which is a valid continuation signal. A new rally leg appears to be underway so long as 76.65 is not broken as support. Mind the talk coming out now that suggests QE2 may be scaled back, or not.
30-year Treasury Dec (USZ) The required probe under last week’s low and the prior week’s low finally developed Tuesday. Having delayed its test, the probe was likely to gain traction and extend to its next target at 128’14. Bounces have room back up to 129’24-130’00 without sellers losing traction. Don’t forget that Jobless Claims comes Wednesday this week due to the Veteran’s Day holiday on Thursday.
Crude Oil Nov (CLZ) Tuesday’s fresh high was retraced to close back under Friday and Monday’s high. The fresh high extended far enough that closing under 85.85 would have invalidated the next higher target at 88.40. Post-close action did dive back under the 86.45 prior target down to 85.48. Unless the reversal is rejected immediately Wednesday, the reversal down would be likely to unfold very quickly.
Natural Gas Nov (NGZ) The open’s gap up to fresh highs suggested that impatient buyers had returned. Cooler heads prevailed, and the gap back to Monday’s close was soon filled. A recovery back to session highs proved strong hands were in control. Monday’s breakout targeting 4.40 was confirmed by Tuesday’s higher close. Pullbacks have room down to 4.15 without buyers losing traction.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).