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The ECB's Surprise Will Reveal Secrets Some Commodities Have Been Hiding


Not extending Thursday's reactions on Friday would suggest that trending has ended.

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: Surprise, surprise, surprise… The European Central Bank rate cut whacked currencies hard. And that whacked other markets. Now comes the confirming session Friday - or not - that either reinforces the moves or signals their end(s).

Dollar Basket
Wednesday's pullback wasn't deep enough to reverse momentum down, or even to signal the rally had ended. Thursday's surprise ECB rate cut explained why, launching a surge to sharply higher highs. Retracing more than 61.8% of the surge still held prior highs as support, being likely to retest Thursday's highs.

Dec Contract EC; (NYSEARCA:FXE)
Wednesday's bounce wasn't high enough to reverse momentum up, or even to signal the decline had ended. Thursday's surprise ECB rate cut explained why, launching a plunge to sharply higher lows. Retracing 61.8% of the plunge still held under prior lows, being likely to retest Thursday's lows.

Dec Contract GC; (NYSEARCA:GLD)
Thursday's reaction to the ECB's surprise rate cut triggered a spike down to fresh lows at 1296.00. That created a bounce limit up to 1311.00, which was tested. Back under 1306.00 would signal the decline had resumed. It held, but 1311.00 wasn't recovered, so a bigger detour bounce is not yet signaled.

Dec Contract SI; (NYSEARCA:SLV)
The 22.05 bounce limit was being attacked when the ECB rate hike blindsided the market. The reaction's spike down essentially fulfilled the initial 21.35 objective before bouncing, leaving outstanding an attraction to 20.70.

30-Year Treasury
Dec Contract US; (NYSEARCA:TLT)
Wednesday's narrow ranging, after touching the decline's 132-24 target, did resolve up, at least initially. Thursday's bounce to 134-24 retraced almost all of the drop from Monday's close back up to Tuesday's opening print. That's not yet enough for a buy signal; a second consecutive higher close is still needed - especially ahead of Friday's Employment Situation report.

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
Thursday's open did immediately reject Wednesday's bounce, at least the portion of it that had exceeded the 94.60 bounce limit. A retest of the lows that also visit the 92.85 target remains likely, so long as 95.30 isn't recovered.

Natural Gas
The suspicious rally didn't prevent very positive anticipation ahead of Thursday's IEA report. And the very positive action didn't prevent retracing it all back to almost unchanged. There was even some optimism left intact, which is potentially bearish from a contrarian perspective, and maintains potential for retesting 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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No positions in stocks mentioned.
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