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Gold's Eerie Calm During Euro's New Lows Is a Warning


Either the euro has fulfilled this leg's target or gold is preparing to tumble Tuesday.

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: One day following gold's break under support, the dollar followed suit by probing fresh lows. But gold only firmed. That's either because the euro fulfilled this leg's target, or because gold is preparing to tumble Tuesday.

Dollar Basket
Monday's low fulfilled the 79.75 target. Having gapped down, an immediate recovery would require making Monday into an Island Reversal by gapping up above 80.10 and extending sharply higher. Alternatively, a likelier bullish scenario would range sideways back up to 80.10. Otherwise, the trend remains down.

Dec Contract EC; (NYSEARCA:FXE)
Monday's open fulfilled the 1.3050 target and ranged around it (mostly above it) through the day. Closing back under 1.3020 would signal the trend is reversing back down.

Feb Contract GC; (NYSEARCA:GLD)
Monday's price action ignored currencies extending, and only firmed after Friday's drop had presumably resumed the decline. The narrow ranging inside day should resolve down without further delay to confirm Friday's break was valid.

Mar Contract SI; (NYSEARCA:SLV)
Monday's opening gap up was too shallow to reject Friday's drop. So long as 34.00-34.10 holds as resistance, back under 3.45 would trigger a new downleg targeting 32.45.

30-Year Treasury
Mar Contract US; (NYSEARCA:TLT)
Last week's consecutive sessions of "ineffectual optimism" finally gave way Monday by gapping down to the 149-18 sell signal and quickly testing its 149-04 target. That setup was likely also to resume the decline, but gapping down seems to have expended too much near-term selling pressure. The afternoon's recovery back up to 149-25 now resets the 149-18 sell signal, whose minimum target would now be 148-16.

Crude Oil
Jan Contract CL; (NYSEARCA:USO)
Monday's gap up to fresh highs at 90.33 was retraced entirely back to Friday's 88.88 close. The attempt to trend higher still seems premature - eve more so. Closing above 90.00 would be bullish, but now closing back under 88.00 would signal momentum reversing down, initially targeting 86.50.

Natural Gas
There was little effort Monday to invalidate Friday's drop. There was also no new low close. While the decline is free to extend indefinitely, Closing back above 3.65 would target 3.70, whose recovery would essentially target filling the gap back up to 3.90.

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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