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What Silver Must Do to Form a New Low


Gold didn't extend down Wednesday, while silver did extend down ­sharply.

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 didn't extend down Wednesday, while silver did extend down - sharply. It's not divergent price action, but one more day of anything similar would make silver likely to snap back up - sharply.

Dollar Basket
Wednesday's gap down was recovered immediately to test Tuesday's lows as resistance. While the gap down to fresh lows does require a retest, it's not required to break lower, and would be vulnerable to producing at least a corrective bounce.

Mar Contract EC; (NYSEARCA:FXE)
Wednesday's open gapped up to a new recovery high just short of 1.3330 resistance before reversing back down to Tuesday's 1.3252 high. At least the gap's new high should attract price back up, where closing above 1.3330 would confirm a bigger upleg underway targeting 1.3640. Color me skeptical.

Feb Contract GC; (NYSEARCA:GLD)
Tuesday's plunge did not extend down Wednesday, and only briefly probed fresh lows. Not confirming the plunge with a second consecutive lower close means that a bottoming process can form. No lower close Thursday would suggest as much.

Mar Contract SI; (NYSEARCA:SLV)
Wednesday's fresh low should still extend down to 30.90 so long as 31.65 is not recovered.

30-Year Treasury
Mar Contract US; (NYSEARCA:TLT)
The 147-00/147-14 corrective bounce target was tested to within one tick Wednesday. Its half-point reaction down was shallow. So long as 146-00/146-06 were to hold as support, the bounce target's upper-end should at least be attacked.

Crude Oil
Feb Contract CL; (NYSEARCA:USO)
The 88.80 bounce limit (basis Feb, 88.30 basis Jan) was tested Wednesday morning. Its test caused hesitation. But its test also soon provided an inflection point for a surge that extended up to 90.33. A second consecutive close would put into play 99.00. So, new lows would require immediately rejecting Wednesday's surge.

Natural Gas
Tuesday's failure to extend above Friday and Monday's ~3.37 highs undermined the breakout. Wednesday's gap down back to last week's lows around 3.28 now requires that another recovery attempt above 3.37 gain traction and extend to at least 3.58.

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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