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Gold's Tumble on Tuesday Should Put Currencies to the Test Wednesday


And that tumble is not going to be retraced quickly.

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 tumble Tuesday fulfilled expectations from the euro having outperformed on Monday. It also highlighted silver's outperformance that I have been describing here. And that suggests the tumble is not going to be retraced quickly.

Dollar Basket
Tuesday's gap down followed Monday's test of the decline's 79.75 target. Testing 79.60 support through the day instead of trending down does keep alive the decline, but also requires the decline to extend without delay to avoid bottoming.

Dec Contract EC; (NYSEARCA:FXE)
Tuesday's gap up followed Monday's test of the rally's 1.3050 target. Testing 1.3105 resistance through the day instead of trending up does keep alive the rally, but also requires the rally to extend without delay to avoid topping.

Feb Contract GC; (NYSEARCA:GLD)
Firming Monday while the euro surged had suggested that gold would tumble Tuesday. The $19 gap down to 1701.00 was the lowest level in four weeks, and extended down to 1692.50. The drop is targeting 1682.50-1683.00 so long as 1710.50 is not recovered.

Mar Contract SI; (NYSEARCA:SLV)
Monday's bounce had failed to recover the 33.90 sell signal that had triggered Friday, so Tuesday's fresh lows were appropriate. Interestingly, the outperformance vs. gold persisted as silver's gap down held a test of last week's 32.90 low, which itself had held a test of the prior week's low. - Gold, meanwhile, broke to its lowest levels in four weeks. Closing back above 33.20 would suggest the drop had ended, but it remains vulnerable to extending down otherwise.

30-Year Treasury
Mar Contract US; (NYSEARCA:TLT)
Monday's recovery from the drop's 149-04 target extended Tuesday to fill the gap back up to Friday's 150-01 close. Despite probing up to 150-10, 150-01 was being tested at Tuesday's close. Back under 149-24 would rob the bounce of its momentum, but 149-18 is still the sell signal.

Crude Oil
Jan Contract CL; (NYSEARCA:USO)
Similar to Monday's gap up that immediately trended down throughout the day, Tuesday's gap up trended back up. Both finished around last week's 88.65 prior high that was likely to hold for several days. Now those several days have ended. The next trending attempt will get every benefit of the doubt for extending.

Natural Gas
Tuesday's gap down under Friday's prior low did not extend down, and only ranged around Friday's low. No lower low is required, so a recovery must be underway Wednesday if the drop is to avoid extending at what could become an accelerated pace.

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.
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