If the Strongest Buyers Are the Most Patient, Then Gold Is Forming One Heck of a Bottom

By Rod David  JAN 09, 2013 3:20 PM

Gold's dip Wednesday keeps alive the potential for forming a more durable bottom.

 


The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today’s Highlight: Gold’s dip Wednesday keeps alive the potential for forming a more durable bottom.

Dollar Basket
Mar Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
Tuesday’s “ineffectual optimism” did not prevent Wednesday’s gap up, but the session did not extend any higher. This pattern can continue rising indefinitely, but delaying any higher high Thursday would suggest a drop to 80.20 is underway.

Eurodollar
Mar Contract EC; (NYSEARCA:FXE)
Wednesday’s morning’s testing of 1.3050 support held, and the balance of the session ranged in negative territory, still Tuesday’s lows into the close. It almost qualifies as “ineffectual pessimism,” enough for any initial strength Thursday to be credible for extending higher.

Gold
Feb Contract GC; (NYSEARCA:GLD)
Only gapping up or some other such immediately aggressive action above 1666.00 would have been credible for avoiding a retest of 1634.70’s opening gap. Wednesday’s dip back down to 1652.00 keeps the drop’s potential alive, especially so long as 1657.00 holds as resistance. Testing 1634.70 intraday and recovering to close above 1640.50 would be optimal to form a bottom.

Silver
Mar Contract SI; (NYSEARCA:SLV)
A second consecutive higher close Wednesday above 30.50 would have confirmed a recovery underway, but the session only ranged sideways, leaving no active signal.

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
Wednesday’s narrow ranging did test the bounce’s 145-16 limit, but held it through the close. Almost any initial weakness Thursday (e.g., jobless claims reaction) would be capable of resuming the decline.

Crude Oil
Feb Contract CL; (NYSEARCA:USO)
Still no resumption of the rally Wednesday, and not even a break higher like Tuesday (in fact, Tuesday’s high held as resistance. The extended narrow range has ruined the pattern’s timing, all but requiring at least a dip down to 91.25.

Natural Gas
Jan Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
Although sellers have not been gaining any traction for their gaps down, they have persisted, including Wednesday’s gap down to new lows. There is no active signal at this time.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
No positions in stocks mentioned.

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