Here are my views of what is going on in the markets and the charts that I’m going to look at entering into next week.
Patterns in play in December Gold, December Silver, Euro-Japanese Yen, Canadian Dollar, Soybeans, Gold,
Patterns in formation: Australian Dollar, Singapore Dollar, January Platinum, December 2016 Eurodollar, December Cotton, December Natural Gas
Patterns completed last week: Soybeans Meal, Wheat.
PATTERNS IN PLAY
December Gold (ZGC, ZMGC, GLD ETF)
As shown in the weekly chart, the continuation contract completed a Symmetrical Triangle. The objective move of this pattern suggests that Gold may hit $1000 within the next few months or so.
A closer look at December contract indicates a possible support at $1212.5, just below current levels. Below these level Gold will be moving at contract’s new lows. Resistance is at $1243.0.
I’m short with a stop at $1281.4. I may amend it lower if the December contract starts to trade above $1243.8.
Silver (ZSI, SLV ETF)
There are at least two patterns in play in Silver: a multi-year Descending Triangle started in 2011 and a smaller similar formation that has been developing in the last 2 years.
The respective targets are at $13.145 and $9.35.
I would not be surprised to see Silver to move vertically from current levels to its targets, given that there are not serious supports to hold it.
Resistance is at $18.70.
The daily chart show a long red candle on Friday and it is reasonable enough to expect some downside follow through early this week.
I’m flat Silver since already short Gold and the two are obviously strongly correlated.
Euro-Japanese Yen (EUR-JPY Spot)
A rare case of Decending Triangle that gets resolved to the upside.
I’ve been long this pair since September 12 close with a stop at breakeven. Resistance at $144.000. Target at $151.700.
United States Dollar – Canadian Dollar (1/Z6C, USD-CAD Spot)
The predominant hypothesis is that a basr in USD-CAD is in place and the market should move higher from current levels as soon as the current consolidation is over.
Above the targets are at 1.1373 and 1.1608. A close below 1.0819 would negate the short term uptrend and put in jeopardy the “bottom in place” interpretation.
I’m currently flat. I’m willing to short the futures contract if the spot market closes above 1.1098.
November Soybeans (XZS, XYK)
The Head and Shoulder pattern formed in the November contract is playing out.
I’m flat this market, having closed my shorts earlier because the tight supply of old meal before the harvest created a potential risk that I did not want to carry. When unsure I prefer to stay on the sidelines. Soybeans can be an extremely volatile contract…
PATTERNS IN FORMATION
Australian Dollar (Z6A, ZM6A, AUD-USD Spot)
The small Head and Shoulder (visible in the daily and weekly chart) completed 2 weeks ago could have signaled the beginning of a new leg down in the Australian Dollar.
Ideally (for chart traders) AUD is forming a 5-year Head and Shouder with an objective price move down to 2009 lows.
Resistance is at 0.9030 and 0.9280. Support is at 0.8650 and 0.8081.
In anticipation of a larget move, I’m holding half of my short position from September highs having closed the other half at 0.9030.
United States Dollar – Singapore Dollar (USD-SGD Spot)
The swing from July low is developing as an impulse that could be very well lead to a break above 1.28 and complete a multi month Symmetrical Triangle in SGD.
A close above 1.2800 would likely bring to a move to 1.4161.
January 2015 Platinum (FPA)
Look for a decisive close below $1325 – 1317.7 for a possible breakdown of Platinu,.
Downward pressure on Gold and Silver should lead to lower prices also here.
Watch at $1325, that is the lower price traded by December Platinum and could offer some support.
December 2016 Eurodollar (Z16GE)
December 2016 Eurodollar has been trading in a tight range since 2013 while forming a possible top.
Last Thursday and Friday this contract got close to complete the third “M” of this top. A close below the low of those days could bring to a retest of $97.585 and $96.95
I’m short as of Thursday close with a stop at $97.87. For me this is an anticipation setup since the breakout has not already occurred.
In the following chart I show also December 2018 and December 2019 contracts. Both of them broke major Trendlines. I have no positions or intend to build one in these two contracts.
December 2018 Eurodollar (Z18GE)
December 2019 Eurodollar (Z19GE)
December Cotton (ZCT)
A half flag pattern may be forming in the December contract. A break below $62.02 could bring as low as $40 in the next few months, as shown in the following chart.
To get a better perspective of the critical position of Cotton, one should look at the continuation chart:
Below I show the same pattern in Cotton ETF, BAL. Support is at $41.78. Target at $22.43.
December Natural Gas (ZNG, ZXG)
In my opinion this market is set to move lower to $3.43 and possibly to retest 2013 lows.
I’m looking at December contract and a decisive close below $3.877 to short it.
PATTERNS COMPLETED LAST WEEK
Wheat easily reached and surpassed its target at $490.
Soybean Meal (ZZM)
Same pattern and same move of Wheat.