If Gold's Rally Isn't Over Now, Then It Has Barely Begun

By Rod David  MAR 03, 2014 4:15 PM

If the action in gold was exacerbated by a temporary fixation on geopolitical developments, then the next reaction down probably won't be temporary.

 


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: Monday's sharply higher highs delivered the consequences to gold's impatient reaction down from last week's target. If the action was exacerbated by a temporary fixation on geopolitical developments, then the next reaction down probably won't be temporary.

Dollar Basket
Mar Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
Perhaps encouraged by the weekend's geopolitical developments, the week began by reacting up sharply from Friday's test of its 78.20 target. A second consecutive higher close would confirm a bottom is forming.

Eurodollar
Mar Contract EC; (NYSEARCA:FXE)
Gapping down Monday formed an island of Friday's sideways ranging at new highs. Bouncing sooner rather than later to fill the gap back to Monday's 1.3815 opening print would be likelier to hold resistance and to launch a new downleg.

Gold
Apr Contract GC; (NYSEARCA:GLD)
Sunday night's rally tested the outstanding 1349.00 target whose test became likely when last week's reaction down from 1342.00 was so impatient. Higher highs Monday up to 1355.00 were still retraced to 1349.00 as support before the close. Back under 1342.00 would trigger a new downleg. Otherwise, a second consecutive higher close Tuesday would put into play much, much higher targets.

Silver
May Contract SI; (NYSEARCA:SLV)
Monday's bounce pierced Thursday's high, which had stopped pessimistically short of 21.75 where a more reliable decline could resume to 20.70.

30-year Treasury
Jun Contract US; (NYSEARCA:TLT)
Sharply higher highs overnight fulfilled the required retest of February's highs. The 133-02 pullback limit's failure would signal the test had held, putting into play a test of the interim low at 131-00.

Crude Oil
Apr Contract CL; (NYSEARCA:USO)
Sunday's night's surge into Monday tested 105.00. A dip back down to 102.90 to lower prior highs could form the basis for a more substantial rally. In any case, it must be broken before considering a short.

Natural Gas
Apr Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
Initially extending to fresh highs Monday didn't prevent a post-open downdraft that prevented a second consecutive higher close or a recovery above 4.66 to reverse momentum up. There is no active signal otherwise.

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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