I am not sure if it's a bit of vacation hangover, if the summer sluggishness is beginning to set in, or perhaps I am just not interested in chasing these latter stages of the USD selloff without confirmation from the other 2 major markets? This move through the 83.50 USDX level highlighted in yesterday's SOTD certainly qualifies as a break of technical resistance, but the effort required to do so has put the USD into a very oversold condition that allows only the most nimble of traders to be long XXX/USD. Plus, the S&P and US 10 yr yield are still contained below their respective risk-ON levels of 1100 and 3.11%.
So for the first time, I am going to include some gold analysis in SOTD to get away from the USD. Unfortunately It's not a product we are allowed to trade in G.C.A.M, so I am personally not taking this trade or counting it in my SOTD Position Tracker, but it's still a nice setup.
The 1263 high in gold registered as the orthodox top, or a truncated .5th wave, within a larger degree ending diagonal in blue 5. The resulting sharp selloff is very characteristic of ending diagonals. We are looking for the end of this corrective rally to complete around $1225 and then embark on the next push lower.
A move down to the 90 min chart shows a possible double zig zag with target resistance into 1225 for wave 2/B. Unfortunately, as I am writing this gold promptly traded from $1218 to $1206 in a matter of a few minutes. It's probably just a wave “b-of-Y”, with “c-of-Y” still to come, so I would not chase this weakness, yet. Not sure if we'll have an opportunity to take a crack at this level, but $1225 should hold as resistance and appropriate stops on this could be located around $1252. That's all for now. Will be keeping a close eye on the tape with sole goal of capital preservation as summer trading takes hold.
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