Posted By Dan Norcini On May 21, 2009 @ 2:10 pm In Trader Dan Norcini |
Dear CIGAs,
It was a very volatile day in the markets today with the gold, Forex, and bond markets making big swings. The Bond market in particular utterly collapsed during the session as looming supply fears rattled bond bulls even as equities dissolved. As the bonds dropped through support, the Dollar was smashed lower and gold catapulted higher forcing a wave of short covering and attracting more new buying. That momentum took it easily through yesterday’s session high with price also besting round number psychological resistance at $950. The move is most impressive and the charts are showing an acceleration higher which is coming out of a period of grinding consolidation. I have noted that the RSI is also confirming the upward move with that indicator finally bettering horizontal resistance drawn off the last swing high.
Volume in yesterday’s breach of resistance at $930 was very high and accompanied by a strong surge in open interest. Both are technically bullish, especially the volume reading. Today’s session is showing good volume as well which is serving to confirm the upward thrust. Traders are slowly beginning to roll out of June and into the August contract ahead of the delivery period.
The weekly charts of the HUI and the XAU both look very strong technically. The HUI has finally bested the difficult 50% retracement level drawn off the March 2008 peak near 520 and the October 2009 low near 150. It has had trouble with that level since the beginning of this year so yesterday’s achievement is very significant. It now has a clear shot at the 61.8% retracement level that comes in near the 379 level. If it can conquer that, technically it will be in position to make a run to near the 455-460 level. Most importantly from a trending perspective, the HUI took out the 100 week moving average yesterday which came in near the 359 level. That is no small feat. All of the major moving averages on the weekly chart are either moving upwards or are getting ready to turn higher. (more)
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