Gold has been compressing at a weekly and daily scale recently and this morning’s weakness has pushed prices down through both sets of signals. The longer-term picture in gold shows monthly-scale top extensions (as reported) last year, which means that we are inclined to look for places to sell it. This is one such, so sell short now.
This comes at a time when the $ index has also been compressing at a weekly scale and this compression now seems to be breaking upward. As it is very early in the week we would not ordinarily draw your attention to such a new weekly-scale compression, but not only does this apparent break confirm the situation in gold (which behaves as an ‘anti-$’) but there was also a daily-scale signal recently in the Euro against the $.
This daily top extension showed that the recent strength of the €/weakness of the $ was overdone and was a reason to buy the $ against the €. We would now recommend that trade. Although this pair may easily trade back toward the highs of the €, this would merely represent a cheaper price at which to buy the $. We are inclined to recommend buying the $/selling the € ‘at market’ instead of waiting for that better price.
Soya meal also compressed at a weekly-scale last week, arguing that a new move is coming in the Soy complex. It looks to be downward so far, which would fit with our general pessimism about commodity prices now. More on this tomorrow, including charts.