02/24 - EUR/USD's ending diagonal

The EUR/USD appears to be completing a fifth wave within a larger third wave move that originates from the November 26th/December 3rd 2009 double top. The formation of a 3-week falling wedge or ending diagonal, which often appears in the fifth wave position, further supports the beginning of a larger fourth wave correction. While speculators continue to add to an already record net short position against the euro (according to the latest CFTC IMM data), the formation of a daily RSI base (14-period) and bullish MACD divergence hint of an overdue recovery. Clearing falling wedge resistance (now at 1.3650) and a RSI bear trendline confirms the breakout and will first target 1.3739, where a confluence of Gann and Fibonacci retracements are clustered. The pattern's breakout target projects a move towards 1.4000, the vicinity of the previous fourth wave (a common Elliot wave target). If, however, the EUR/USD manages to close below 1.3486 (a key Fibonacci retracement of the March/December 2009 rebound), then 1.3444 (Friday's low) is likely to be retested. A weak test or a marginal breach of the newly formed 2010 low would offer another compelling (long) entry point.

02/17 - DXY's golden cross

The DXY's (US Dollar Index) 50-day MA has broken above it's 200-day MA to signal further strength in the medium-term. This is the first golden cross since the third quarter of 2008 and only the third since the bear market began in 2002. More importantly, the Greenback has experienced this bullish crossover in the early stages of both major corrective recoveries in 2005 & 2008. An oversold hourly dip near the 20-day MA would be an actractive (long) entry point.

02/10 - Watch Gold's daily 9-period RSI

While Gold continues to be a high beta risk trade, the 9-period daily RSI has formed an important base just above the 30 region. Back in December, RSI initally based above the oversold threshold when Gold rebounded off bull trendline support (off the October 2009 low). The subsequent RSI base at the end of January (above 30 again), triggered a rebound off a 15-month bull trendline.

The brief counter-trend recovery ran into a triple failure of sorts. The same trendline that had previously supported price-action in December had now reverted to resistance. The 50-day MA and a 2-month bear trendline also contributed to last week's relapse. Once again, the key RSI base above 30 supported price-action, completing an A-B-C correction off the all-time high and marking a bullish hammer formation on Friday.

The latest rebound has demonstrated bullish RSI divergence off the aforementioned base and now eyes a break above 8-week bearish RSI trendline resistance. If, however, price-action fails to clear former 15-month trendline support (now at 1084), there is a strong probability of retesting Friday's low at 1043 and the key RSI base. A weak test or marginal breach of 1043 would present a significant long-term buying opportunity. Meanwhile, a sustained loss of the RSI base would suggest a deeper retreat that would immediately expose the 200-day MA near 1024.

02/01 - GOLD rebounds off key long-term trendline

Gold's rebound was fueled by daily bullish MACD divergence and positive diverging 4-hourly studies, highlighting 15-month bull trendline support. Last week's marginal probe below the December swing low (1074.00 - 22 Dec) triggered a false-break and could ultimately mark a double bottom base (only above 1162.45 confirms). The latest rally has now retraced 38.2% of the losses off the 2010 high (1162.45 - 11 Jan) and next eyes the 1118.40 region (08/13 Jan lows & 21 Jan high). This key pivot also coincides with a 50% retracement (of the 1162.45/1073.85 decline) and with an internal trendline (broken bull trend off the October 2nd 2009 low). Back below the 100-day MA in the 1092.00 area, however, defers strength for a retest of 1073.85/1074.00 (28 Jan/22 Dec lows).

01/26 - Gold finds support at the 100-day MA

Gold broke below a 5-month trendline late last week and has since found temporary support at the rising 100-day MA and at 1086.59, a 50% extension target (the December bear correction projected from the January high). Bullish RSI divergence (4-hourly charts) suggests temporary stabilization that could retest the 1118.40 former pivot, where the 5-month (now internal) trendline lies. A close below 100-day MA support (now at 1088.34), however, points to a retest of the December 2009 low (1074.00).

01/21 - USD/CAD bulls seek a retest of the 20-week MA

Diverging daily & weekly studies (RSI & MACD) have supported the latest recovery off 1.0223, just above obvious support at 1.0203 (2009 low - 15 Oct). Clearing the falling 20-day MA on Wednesday has stabilized the outlook and could mark last week's low as the second point of a 3-month double bottom. In the meantime, bulls seek a retest of 1.0583 (30 Dec high), near the stubborn 20-week MA. As mentioned last week, the USD/CAD's 20-week MA has capped (on a closing basis) recovery attempts since late November 2009. Clearing it would expose the 1.0750/1.0754 pivot (17 Dec/27 Nov lows). A daily close below the rising 10-day MA (now at 1.0343), however, would threaten the recovery structure and could possibly reopen 1.0223/1.0247 (14/19 Jan lows).

01/19 - The DXY's 10-week MA reverts to support

The DXY's 10-week MA, which provided resistance for much of the move down to the 2009 low, has reverted to support (and has reverted to resistance for the EUR/USD). The EUR/USD's lack of weekly RSI divergence suggest a move to 1.40, the 50% retracement of bull market bounce off 1.2880. Only a weekly close above the falling 10-week MA (now at 1.4540) will shift the focus back towards 1.4680 (50% retracement of the 1.5142/1.4220 decline).