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Long Bond Posturing Ahead of FOMC Statement


Is it digging in resolutely, or just ducking anxiously?

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: The long bond's inability to sustain upside momentum could be defensive posturing ahead of Wednesday's FOMC policy statement. But its unfinished business below suggests either a negative reaction, or else that a negative resolution will follow.

Dollar Basket
Tuesday's bounce back up to 82.10 stopped short of the 82.20 bounce limit. But the decline probably cannot afford to hesitate resuming if its momentum remains intact.

Sep Contract EC; (NYSEARCA:FXE)
Difficulty upon testing 1.3300 resistance Tuesday reacted down and ranged narrowly sideways. Now pullbacks must hold 1.3225 to maintain the rally's momentum next targeting 1.3330.

Aug Contract GC; (NYSEARCA:GLD)
Another dip down to 1319.00-1320.00 tried to reverse momentum down Tuesday. Monday's bounce was probably too shallow for sellers to be refueled yet. But breaking lower would get every benefit of the doubt if confirmed by a second consecutive lower close under 1612.50. Back above 1330.00 should have little reason to further delay launching a new rally leg.

Sep Contract SI; (NYSEARCA:SLV)
Monday's reaction down from gapping up had stopped optimistically short of actually filling the gap back to its open. That optimism was potentially bearish from a contrarian perspective. Tuesday's gap down confirmed as much, although the balance of the session only ranged narrowly around 19.65 prior lows. Back above 20.00 would resume the rally, and avoid extending down to 18.88.

30-year Treasury
Sep Contract US; (NYSEARCA:TLT)
Monday's reaction down from retesting 135-00 resistance had bounced off of 133-26. Tuesday's narrow ranging retested the low, not invalidating that the 132-24 gap is in-play.

Crude Oil
Sep Contract CL; (NYSEARCA:USO)
Further delaying a recovery back above 106.00 all but confirmed that support had been chipped away. Tuesday's break to fresh lows probing under 103.00 should extend to 99.00 so long as Wednesday were to confirm with a second consecutive lower close.

Natural Gas
Monday's break was not rejected immediately even to try forming an island reversal. A probe of "higher prior lows" up to 3.55-3.60 would likely reverse down to retest the lows.

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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