December Gold – Despite signs that the economy may be making a slight recovery, the dollar remains weak and inflation fears are in the air, so investors are still looking for a reliable place to put their money. As long as investors continue to look for a safe-haven to preserve capital, gold will be supported over the long-term. On the other hand, we need to look at the short-term technical picture for a good entry. Overnight, Gold dipped to the 38.2% Fib retracement level at $983.20 before turning higher and closing at $995.30. This may have been the opportunity we were looking for, because it looks like the market has formed a bullish reaction swing pattern that suggests the Gold is poised for a run at the previous high of $1,009.70 and next high of $1,015.00 reached on February 20, 2009. Buy Gold at $1,001.00 stop, with the stop loss at $982.90.
December Canadian dollar – Over the past four trading sessions, the Canadian dollar has formed a potentially bullish reaction swing pattern that, if confirmed, would be the final stage of a longer-term TR pattern. (The Trend Reversal pattern is a swing trading strategy pattern that appears at major highs/lows.) Thursday’s low tested the 20-day SMA before turning higher and closing near the high of the daily range. Buy the Canadian dollar at 9315 stop, with a stop loss at 9075.
October RBOB gas – The RBOB has completed an A-B-C continuation pattern that typically appears in the center of a longer-term reaction cycle. The recent two-day correction began after hitting resistance at the 20-day SMA, following the September 4th reversal date. This is a potentially bullish setup, but the market needs a trade above 1.8567 to confirm the swing trade pattern and timing signal to confirm the buy. Buy the RBOB gas at 1.8575 stop, with a stop loss at 1.7782.
November Crude oil – Oil prices posted a small gain on Thursday after a report showed that U.S. crude inventories dropped more than expected last week. Oil also got some support from a weaker U.S. dollar. Looking at the Crude oil chart, I see a large wedge formation building energy for a breakout. Although the Crude has not tipped its hand as to the next direction, I lean to the bullish side of the market. Typical market behavior is for a market to break out of a wedge formation in the same direction it was moving before forming the wedge…in this case, the direction is up. I’ll continue to monitor the chart patterns and market structure for a confirming signal before entering a new position.
December Japanese yen –Long from 1.0880 – Last price @ 1.0908 – The two-day correction bottomed just above the 20-day SMA on September 8th. This is where the market turned higher and closed above the prior three closes. Good follow-through buying on Wednesday confirmed the bullish reaction swing pattern and triggered the buy signal for a long position at 1.0880. The yen did reach a new six-month high, but was not able to hold the new high into the close. However, the yen pushed to another six-month high on Thursday. A close above the prior high would be positive price action and portend a new upward swing in the currency. Hold the long position, with the stop loss at 1.0825
