Gold's Recovery From Double-Digit Plunge Doesn't Mean New Rally Is Beginning


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: Gold's Sunday night plunge opened the week with extreme sentiment. As is often the case, that proved to be a sentiment extreme. The balance of the session rallied sharply. Gaining $20 from the low might seem the opposite of last week's bearish behavior, but it's the same elasticity - so it's probably the same sponsorship, and not yet necessarily a bottom.

Dollar Basket
Monday's open gapped up to attack the recent bounce's peak. Holding 81.05 did not yet reject Friday's drop, or prevent sellers from regaining traction.

Dec Contract EC; (NYSEARCA:FXE)
Friday's retest of recent highs didn't follow through Monday, as the open gapped down. Sellers didn't regain control, as the session only ranged around Friday's 1.3515 low.

Dec Contract GC; (NYSEARCA:GLD)
Despite extending down sharply overnight to test 1225.70, Monday's opening gap down reversed back up immediately to probe back into the decline's 1240.00-1245.00 target area. Post-close action even rallied through its upper end. The gap back to Monday's 1228.10 opening will need to be filled eventually. But not necessarily prior to extending the bounce to test 1260.00 or 1270.00.

Dec Contract SI; (NYSEARCA:SLV)
Fresh lows Sunday night weren't retested intraday Monday, as the open immediately recovered above prior lows and extended higher through the morning. The overnight lows will need to be retested eventually.

30-year Treasury
Dec Contract US; (NYSEARCA:TLT)
Monday's initial weakness was recovered back into positive territory, extending last week's rally to resistance above 132-06, attacking 132-14 which remains in play so long as 131-28 now holds as support.

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
Now we know why last week's bounce couldn't get through its 95.00 trigger. The Iran deal removed the threat of US attack for six to 12 months, lopping off almost $1.50 at Sunday night's open. The equivalent to the Dec. contract's decline target was attacked overnight at 93.20, and retested more deeply Monday morning, ultimately recovering to probe back above 94.00. The pattern's bottoming potential remains intact, but still needs to close at least above 94.60 to begin signaling momentum extending up.

Natural Gas
Despite my own lack of confidence in the recovery, it did probe its minimum 3.81 objective Sunday night up to 3.85. The balance of the session tested and held 3.81 as resistance. Closing back under 3.77 would start to signal momentum reversing back down.

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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Commodities

Referenced Stocks: FXE , GLD , SLV , UDN , UUP



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