Tuesday, February 1, 2011

Currency traders will have the wind at their backs for perhaps a couple more days, since the Dollar Index looks likely to fall to at least 77.26 over the near term.  Two other targets just below that Hidden Pivot lie respectively at 77.05 and 76.62.  All are shown in the accompanying chart, but as you can see, there are a few more.  Each can be bottom-fished with a stop-loss as tight as four ticks.

Don't ever think you've killed the Hydra by lopping off one or two of its ugly, smelly heads, no sirree.  Yesterday's buyers, insensate as ever, were manifestly untroubled by world events, and so we'll have to assume it's going to take more than a little blood on the streets of Cairo to cause them to back off for more than a few hours.  Still, because there are no gimmees in the world of Hidden Pivots, we'll accept nothing less than a high exceeding Monday's pre-swoon peak at 1299.50 as a sign that bulls are back in charge, much as they have been for the last 23 months.  As of around 11:20 p.m. EST Monday, the March contract had slightly exceeded the 1288.00 Hidden Pivot target of a minor ABCD pattern on the hourly chart.  This was reason for a moderately bullish bias for the very near-term, but traders will need to drill down to the five-minute chart to find camouflage cover.

Silver continues to look feistier on the intraday charts than gold, having generated an impulsive leg with sufficient thrust to reach 29.645 over the near term.  The midpoint resistance lies at 28.585, somewhat above Monday's peaks, so bulls will have their work cut out for them overnight into Tuesday morning.  Night owls can use a midpoint support at 27.975 to try to get long, stop 27.970.  As of around 11 p.m. EST, the pattern that shows this set-up best leaps to the eye from the 15-minute chart, where A=28.370.

A million protestors reportedly were headed into the streets of Cairo Monday night, so perhaps we'll have an opportunity to see whether Wall Street can fake keeping its cool for yet another day.  April Gold looked moderately buoyant, evidently content for now to glower menacingly at those who would deign to hold it down.  If their collective weight should fail in this objective, look for the futures to pop to as high as 1360.30.  your clue that the thrust will go the distance would come with a decisive upside penetration of 1342.00, the midpoint resistance associated with the target. The relevant price points are shown in the accompanying chart.  Pivoteers may notice that a pullback from a tick or two above the small peak at 1339.50 could set up a an excellent camouflaged buying opportunity. _______ UPDATE (11:41 a.m. EST):  The rally died at the 1342.00 midpoint pivot exactly, giving way to a $16 drop. There was no consequence for bullish traders, since there was no long-entry signal on the lesser charts. The next speculative buying opportunity (or bearish telltale) could come at 1328.50. On the 30-minute chart, that is a midpoint support derived from A=1342.00 (8:30 a.m. EST), B=1326.00.

Gold has been whipsawing comically today, but not sufficiently to alter the bullish target for the April contact published last night. Since the midpoint resistance at 1342.00 has been breached, the target should be regarded as no worse than an even-odds bet.