If this year’s upward drift in rates on the 30-Year is going to continue in earnest, or perhaps even take wing, we should see a pop this week or next above the 4.138% peak recorded in early June when interest rates were correctively on the way down.
From the monthly archives:
October 2010
A Hidden Pivot support at 1291.60 still beckons as a logical place for this now seven-day-old correction to bottom. However, we should be alert to the possibility of a decisive turn from somewhere above it, since the futures were struggling on Friday to reach even the 1314.25 ‘c-d’ midpoint of a lesser downtrend. They would more than merely harass bears this week with a print exceeding 1158.90, a “soft” peak on the hourly chart that I identified here earlier.
The somewhat muddy midpoint support at 77.120 shown in the chart will make a suitable minimum downside target for now, but if it’s breached decisively, look for the slippage to continue down to at least 76.500, its ’D’ sibling. Any breach of the midpoint by more than just a few ticks would be further evidence that the rally begun 11 days ago is likely to go nowhere.
A Hidden Pivot support at 22.565 is equivalent to the 1291.60 correction target that I’ve flagged in December Gold. We can use it as a minimum downside objective for the seven-day-old correction, but if you want to try bottom-fishing with a very tight stop-loss, I’ll suggest doing so at 22.490, a promising ‘d’ target that comes from a true one-off ‘a’ high (see chart). Alternatively, any countertrend rally will start to look encouraging at 23.600, a tick above a “soft” external peak on the hourly chart. ______ UPDATE (2:42 a.m. EDT): The futures are on a tear tonight, having reached a high so far of 23.710. The rally doesn’t amount to much on the hourly chart — that would take a print at 24.410 – but on the 10-minute it is bullishly impulsive. There are no immediate rally targets I can offer that you could take to the bank, so to speak, but I’ll suggest using a so-so pivot at 23.830 as a minimum upside target for the very near-term.
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The pattern shown in the chart points lower, to a Hidden Pivot support at 477.66, and this number must be presumed in play because its sibling midpoint at 493.42 was decisively exceeded yesterday by three points. A print at the target would imply the creation of a fresh bearish impulse leg on the intraday charts, but HUI would need to go just a little bit lower to amplify the effect with a print beneath September’s 476.40 low. Alternatively, bulls would need a print within the next few days at 523.35 to turn things around.
Short-sqeeze conditions are likely to obtain today, since DaBoyz were able to engineer a deep swoon that by day’s end left DXY trading close to the spike high fabricated the night before. Shorts will be nervous as a result, and we should look for them to propel the dollar higher: most immediately to a minor Hidden Pivot at 77.65, but to another at 77.85 if any higher. A print at the latter number would be impulsive on the 30-minute chart, and therefore presumably sufficient to keep the rally going for at least another day.
Yesterday’s decline formed a weak bearish impulse leg on the daily chart by surpassing a single external low , but it took a two-day retracement rally and a running start to do it. That’s pretty timid action for what some seem to fear could be the start of a major correction in gold. That’s possible, of course, but on first evidence, we needn’t cower in fear at the prospect — and we should certainly be ready to seize the opportunity the moment bulls turn things around. Most immediately, however, a 1291.60 Hidden Pivot support that I broached here earlier must be viewed as the minimum damage to expect in this now five-day-old correction. The midpoint support associated with that number lies at 1320.60, and because it has already been breached by a decisive $2.40, we must assume that the ‘d’ target itself is in play. Alternatively, a “soft” peak at 1358.90 that we’ve dwelt on in recent days remains the number to beat if bulls are to reverse the momentum of this slide. A more subtly nuanced (and more speculative) sign of a turn would come today at 1333.60, where the five-minute chart turns bullish. _______ UPDATE (2:53 a.m. EDT): The futures are in a take-no-prisoners rally early Monday morning, but the so-far high at 1347.10 is still $2.60 shy of becoming impulsive on the hourly chart. More than merely impulsive, however, would be still better, and that’s why we should be rooting for a print at 1359.00 today. It is there that the bad guys would be likely go into pain-avoidance mode via short-covering.
The futures took a tradable, 14-cent bounce off the 23.455 pivot I’d flagged, but it proved fleeting. Now, there are several compelling, minor downside targets, but I would suggest using a Hidden Pivot support at 22.565 (shown in the chart) as a minimum objective for the near term. It can be bottom-fished with a stop-loss as tight as four ticks. Alternatively, it would take an upthrust to 24.410 to turn the hourly chart bullish.
An 1192.50 rally target given here yesterday remains valid in theory, although the price action in this vehicle has been so flaky lately that I’m not going to hazard a prediction as to when in the day it might be reached. Night owls should consider bottom-fishing at 1168.25, stop 1167.50 if the futures have gone no higher than 1177.50 first. The pattern yielding the downside target is glow-in-the-dark obvious on the 30-minute chart, where A=1186.25 and B=1167.25.
