Quick Take: Currencies and Gold
Our decision to get into gold two days ago proved timely; yesterday many names gained 2 to 3% and a few energetic gold stocks moved as much as 5% on the day. What’s more important is that there is a potential bottom forming here, so an early entry is even more important for those who plan to ride out any noise for the next few days with a break even stop, hoping to have caught a lasting bottom for a multi-week trade.
Currencies Strengthen Against USD
But across the board, there is still room for a reversal of the last day’s price action and continued USD price appreciation:
GBPUSD – a test of bottom, so far successful, but also a stealth bear flag forming for the time being unless price holds abvoe the 20EMA just above. New GBP longs would not want to see the low of Thursday’s tall up bar broken.
USDJPY – spike top at the range high test. Traders will be watching this one carefully for confirmation of a reversal (not here as yet).
EURUSD – so far just a bounce in a down trend, however if it can push above the range bottom immediately overehead and hold, we are likely to see EUR run higher for a while, possible target around the 1.32 range before pausing or reversing again.
USDCAD – has dropped back into the range and unless it turns around shortly I’ll be converting some funds myself.
Gold
Ready for Good or Bad (depending on your outlook and trading stance) scenarios?
First the bad, a possible ultimate target should gold break down below the recent swing low:
And the “good”, at least for the short term – price has pushed back up into the range above with a solid push up, and its easy to imagine the declining trendline being bought by excited gold bugs if broken.
Incidentally, immediately after any such trendline break is when we should be on high alert to exit (if we are scalping quick profits) or to ready a buy stop above any decline which immediately follows a trendline break (if we are not already long).
We’ll follow up on this as the days unfold.
05.02.11 09:18 #