Daily Spotlight: Currencies
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]As this post’s title implies, I’m reinstating and expanding my coverage of other markets. Each day will focus on a different complex (the schedule is at the bottom of each post). Soon more coverage within each complex will be added, and Softs will be added on Fridays.
Dollar Basket, Sep (DXU): The second of at least two corrective rally legs reached no higher than necessary at August’s highs. Its highs tested the minimum that would qualify as a second upleg. Despite holding a high, and despite reversing down violently, last week, that doesn’t necessarily mean a new downleg is underway.
Wednesday’s gap down (highlighted pink) wasn’t put to much of a test since the morning’s low was never probed. Thursday’s session (circled green) could have closed lower to confirm the break anyway, but it did not. However, fresh lows – or, more importantly, a recovery from fresh lows – is needed at this stage.
Overseas trading already probed another fresh low, further probing August’s prior lows (highlighted gray). Extending down here would be premature. A corrective bounce targeting 82.55-82.65 is likelier, first. And either its test launches a serious downleg, or else back above 82.85-82.96 would target new highs at 84.40. (DEC is trading at a 33-cent premium.)
Crude: The corrective bounce is done, and price action since then has been just noise within the range while awaiting the downleg’s resumption.
Natural Gas: Thursday’s fresh low filled the gap back to the prior Monday’s close. Friday’s close above Thursday’s high came a day too late to be optimal, but extending higher without delay would help to confirm a significant bottom forming.
Gold: Friday’s gap and substantial spike down were recovered entirely, already expending all of the morning’s pent-up buying pressure. The next opportunity to end the corrective bounce – and perhaps its last – would be an immediate drop back under 1242.50-1244.00, this time durable, extending down over multiple sessions.
30-year Treasury: The second downleg arrived on schedule with Friday’s Employment Situation report, falling halfway to its next objective at 128’14, so long as bounces now hold 131’22 on a closing basis. Bounces could test 132’12 intraday.
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Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…
Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).