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Friday Should Quickly Reveal Whether the Euro Has Trapped Shorts


Critical targets, levels, and supports for major liquid commodities.

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: Currencies like the euro had been suggesting their sellers were weakening. Thursday's fresh low is trying to suggest otherwise. That, or it is trapping shorts, so that almost any strength Friday can trigger a steep and substantial surge into Monday's open.

Dollar Basket
Sep Contract DX; (UUP), (UDN)
Three consecutive sessions of ranging relatively narrowly around last Friday's 82.65 high indicated that buyers were tired, and probably needing a corrective dip to refuel. The rally is trying to resume anyway. Thursday's open gapped up and extended higher to 83.06. Gapping open under 82.75 would be likely to trend down sharply. This bounce could otherwise extend up to 83.77.

Sep Contract EC; (FXE)
Three consecutive sessions of ranging relatively narrowly off of Monday's gap down indicated that sellers were tired, and probably needing a corrective dip to refuel. The drop is trying to resume anyway. Thursday's open gapped down and extended lower to attack 1.2425. Gapping up Friday above 1.2470 would be likely to trend up sharply. The drop could otherwise extend down to 1.2325.

Aug Contract GC; (GLD)
Wednesday's bounce did not extend any higher, let alone trigger a reversal up. Thursday's open gapped down through 1570.00 and extended down sharply to new lows at 1547.60. A second consecutive lower close could once again trigger a much bigger downleg underway. But having avoided one consecutive confirmation Wednesday, Friday is less likely to confirm Thursday's new low.

Jul Contract SI; (SLV)
Recovering 27.05 would have avoided entering a much larger decline. The drop only extended, down to 26.07. Closing above 26.45 would suggest the break had failed anyway, targeting 27.05 and 27.50.

30-year Treasury
Sep Contract US; (TLT)
Without refueling buyers any further after all, Thursday's open gapped up sharply to 149-18, and then extended higher intraday to test 150-00. A second consecutive higher close would launch a new rally leg. Otherwise, almost any close back under 149-18 would be bearish.

Crude Oil
Aug Contract CL; (USO)
Wednesday's break higher to attack 81.00 from its recently formed Symmetrical Triangle wasted little time unwinding Thursday. A session-long slide probed under last week's lows to 77.28. As important is that its new low close fulfilled a requirement. That's not a buy signal, and the drop can extend to 76.25 or lower before another recovery attempt.

Natural Gas
Jul Contract NG; (UNG), (UNL)
The rally's 2.83 target was tested at Thursday's open, but its resistance held, as a consolidation would still be appropriate.

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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