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Long Bond's Three-Day Deep Drop Suggests a Volatile NFP Report Is Coming


Thursday's test of support was a little too low to be snapping back instead of extending 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: Three consecutive extremely pessimistic sessions in any case would be vulnerable to a steep reaction. This setup is appearing in the long-bond, right before Friday's Employment Situation report. Look out below if the catalyst doesn't serve to reverse price up.

Dollar Basket
Thursday's open almost immediately fulfilled the bearish setup of reversing Wednesday's test of 82.37 resistance back under 82.25 to signal momentum reversing down, probably targeting at least 81.65.

Mar Contract EC; (NYSEARCA:FXE)
Thursday's opening surge up into the 1.3105-1.3113 buy signal targeting 1.3185 and 1.3300 was not extended higher intraday, but was maintained. A second consecutive higher close Friday would confirm.

Apr Contract GC; (NYSEARCA:GLD)
Thursday's gap up to retest 1584.00 again did not extend higher but it was not rejected outright except to dip back down to 1575.00. Although the bounce limit is 1579.00-1581.50, a drop to fresh lows with potential down to the 1550.00 area should be underway immediately to avoid a bigger bounce to 1596.50-1601.00.

Mar Contract SI; (NYSEARCA:SLV)
Thursday's early test of 29.10 buy signal reversed price down to fill the gap back down to Wednesday's ~28.75 close. Back under 28.65 would trigger a detour to attack prior lows

30-year Treasury
Jun Contract US; (NYSEARCA:TLT)
A third consecutive session of pessimistic, impatient selling had potential for a contrarian bullish setup ahead of Friday's Employment Situation report. Indeed, Thursday's open did spike down on economic reports and the balance trended down. The low was a little deeper than optimal, and not yet in recovery, so there is still room down to 141-14/141-21 before signaling a new downleg underway. Back above 142-10 would be likely to extend up sharply to test 143-20.

Crude Oil
Apr Contract CL; (NYSEARCA:USO)
The recovery needed to be obvious by no later than Thursday morning, if extending the downleg was going to be avoided. That extra allowance was generous and due to current events. But the open did extend higher to test the 91.45 buy signal and recovered it.

Natural Gas
A little firming from the recent reaction down off of new highs is only delaying the 3.30-3.33 target.

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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