Different Day, Same S...tory
By Nic Lenoir Of ICAP
Not a whole lot of excitement today as the US stock market is making it increasingly easier for Chinese stocks to out-trade them in terms of daily volume (actually on a good day Chinese stocks trade more volume in $ terms that NY, Tokyo, and London together).
We reiterate our observation of divergence on the hourly charts for the short gold and short EURUSD trade, and still expect a rebound for both. We had warned about a possible final dip to 1.455 yesterday. Now that this is out of the way, and that divergence has been even more so exacerbated with new lows and less bearish momentum, we feel we are closer to that move. our medium term view of course remains bearish and we know have a great sell zone at 1.4880/1.49 which corresponds to the 50dma, the 61.8% retracement, and the wave 4 of lower order. Surely stars are aligning here.
Same observation for Gold. We retested the low this morning and bounced right on the support line in RESI we had highlighted yesterday. We have a possible H&S which will be triggered if we rally past 1,130. Similar magnet sell-zone as for the EURUSD is at 1,165/1,170 with the same arguments.
Stocks can do just about anything here in dismal volumes, but above 1,117 we recommand scaling into shorts.
Good luck trading,