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Draghi Says ECB Will Defend Euro to the Death

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Market activity suggests ECB action is already priced in.

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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: Mario Draghi followed Thursday's words with deed Friday. After assuring markets that the ECB would defend the euro to the death, new efforts were announced. That's the good news. The bad news is that the impact of Draghi II was sustained only among stocks, while other intraday reactions were retraced entirely (in the case of currencies), modest (in the case of gold), or non-existent (in the case of crude oil).

Dollar Basket
Sep Contract DX; (UUP), (UDN)
Wednesday and Thursday's gap down did not trend down intraday, confirming that the drop has been only a correction. Friday's knee-jerk reaction down was soon retraced entirely. Any delay in resuming the decline Monday would be likely to fill the gap back up to the rally's high close.

Eurodollar
Sep Contract EC; (FXE)
Two consecutive sessions of gapping up and ranging sideways do not form a durable uptrend. Nor can they launch a durable uptrend. So Friday's spike up on Draghi II were ultimately and all too easily retraced entirely. Any delay in resuming the rally Monday would be likely to fill the gap back down to the decline's s low close.

Gold
Aug Contract GC; (GLD)
The breakout's 1622.00 target was tested up to 1626.60. Its reaction down still closed positive on the day to prevent sellers from gaining traction. Closing under 1614.00 would start to signal momentum reversing down.

Silver
Sep Contract SI; (SLV)
The potential to 26.75 was realized Friday, but its reaction down still returned to 26.50. Unless immediately recovered Monday, a test of fresh lows down to 26.00 remains likely.

30-year Treasury
Sep Contract US; (TLT)
Thursday's delay in reacting down from the rally's longstanding 153-04 target did not prevent Friday's GDP triggering a gap down to Tuesday's 151-22 prior low that extended down to 150-18. Draghi II comments triggered another plunge down to 149-08. Back above 150-14 would signal a corrective bounce underway.

Crude Oil
Sep Contract CL; (USO)
Another day spent ranging narrowly around the 90.00 buy signal without triggering it undermines the credibility of 90.00's break being able to trigger a new upleg.

Natural Gas
Sep Contract NG; (UNG), (UNL)
The 3.03 pullback limit test (basis Sep, vs. 3.05 basis Aug) was probed Friday down to 2.98, but 3.03 was still being tested into the close to prevent sellers from gaining traction.

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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No positions in stocks mentioned.
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