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Recent Plunge in Gold May Be Just the Beginning

Rod David

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 "ineffectual optimism" Tuesday doomed Wednesday's probe of fresh highs. The reaction down was very destructive. A second consecutive lower close Thursday would be more destructive into next week.

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Dollar Basket
Jun Contract DX; (UUP), (UDN)
Wednesday's choppy ranging around unchanged ultimately ended flat, still needing to recover 83.00 and 83.33 to signal momentum reversing up.

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Jun Contract EC; (FXE)
Tuesday's attack on last week's Bernanke reaction was cut short Wednesday by this week's Bernanke reaction. Wednesday's initial drop was recovered to probe temporarily above 1.3145 resistance up to 1.3165. Unless resistance were probed again Thursday, a slide back down to 1.3020 should be underway.

Aug Contract GC; (GLD)
Wednesday's gap down to test 1285.00 was saved momentarily in reaction to Bernanke's unembargoed remarks, which triggered a surge to fresh highs attacking 1300.00. But the open's gap down was revisited and broken before the morning ended. The resulting pivot reversal setup also tested 1271.00, which should not have been revisited unless momentum were reversing down.

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Sep Contract SI; (SLV)
Wednesday's probes above 20.00 were reversed back down to 19.55 and lower at an accelerated pace to test 19.25. Its break would target 18.88 and fresh lows.

30-year Treasury
Sep Contract US; (TLT)
The reaction to Bernanke's remarks extended this week's bounce to fully test its 135-16 resistance, which held after being probed intraday up to 135-28. Filling the gap back down to 132-24 should be in-play so long as 135-16 isn't recovered.

Crude Oil
Aug Contract CL; (USO)
Tuesday's failed probe above 106.35 did not extend down Wednesday, as the session only ranged narrowly sideways.

Natural Gas
Aug Contract CL; (UNG), (UNL)
Wednesday's gap down fell a little further to attack the upper end of 3.55-3.60 support, but selling pressure was too weak to dig deeper. The gap was left outstanding ahead of Thursday's EIA report, which would be an appropriate catalyst to launch a rally above 3.73.
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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