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What Gold's Rally Into and Out of Year-End Is Telling Us


Tuesday's interim dip already wasn't credible. Extending its recovery Thursday is.

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: If 2014's first trading session is any indication, then this year will not reward complacency. Thursday's abrupt resolutions to the recent euro topping and gold bottoming patterns might still be absorbed Friday. But entering the week without rejecting Thursday's action will confirm their new trends are underway.

Dollar Basket
Gapping up Thursday helps to confirm a bottom is forming, which will continue being the premise so long as 80.50 now holds as support.

Mar Contract EC; (NYSEARCA:FXE)
Three sessions of consolidating at resistance proved to be distribution when Thursday's open gapped down sharply to the prior bounce's origin. A second consecutive lower close Friday would confirm a new downleg underway potentially targeting 1.3500. Otherwise, a bounce must hold 1.3695 to maintain this break's momentum.

Feb Contract GC; (NYSEARCA:GLD)
Thursday's gap up extended through the 1217.00 resistance whose test had produced Tuesday's new low. The 1232.50 target remains intact so long as 1221.00 now holds as support. The target can be tested up to 1237.00-1240.00.

Mar Contract SI; (NYSEARCA:SLV)
Extending higher without delay Thursday would have been credible for putting in a bottom. Gapping up sharply fulfilled the condition. Extending higher without delay Friday would be credible for extending the recovery to 20.70.

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
Thursday's retest of the decline's 127-28 target was recovered back above the 128-06 to test 128-26. This suggests that a bottom is forming, which would be signaled by closing higher Friday.

Crude Oil
Feb Contract CL; (NYSEARCA:USO)
Fresh lows Thursday extended down sharply, too deeply to be considered only a corrective dip. Any potential for resuming the rally will require another accumulative consolidation pattern to form, and then to trigger. Thursday's 95.50 low is a 61.8% retracement of the rally from 92.15, so trying to extend down Friday morning might stretch the rubber band too tightly not to snap back up. The delayed EIA report will be released Friday morning.

Natural Gas
Tuesday's year-ending fresh low was seemingly rejected by Thursday's new-year gap up, yet again missing a second consecutive lower close that would have been bearish. The inside day retraced only 61.8% of Tuesday's drop to 4.33, so extending any higher Friday would be credible for surging sharply intraday. Closing under 4.23 Friday would be very difficult to recover without yet forming another accumulation pattern. The delayed EIA report will be released Friday morning.

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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