Well, all commodities (precious/Industrial/Energy) got hit yesterday and not even the Aluminium chart which was testing such good levels could withstand it.
What now? Some quick levels to watch.
Gold: Well ,you can see why triple momentum divergence is one of my favourite indicators as Gold imploded yesterday as that completed.
It now looks to be a danger of extended losses towards at least $2,332-$2,343 and below there, $2,318. Below that latter level would be concerning as would open up the 55-day MA ($2,294) and possibly the low of the last down move and possible double top neckline at $,2277- below there and this would look like a full-blown reversal that could see as low as $2,100+ again.
As expected, the USD and yields are not helping here.
The DXY and BBDXY have started to rise again and USDJPY set a new high in this move. Resistance is met at 157.20 and then 158.21.
GBPUSD has "flirted with the 76.4% pullback level at 1.2754 and may well be a good fade here especially with EURGBP so far holding major support at .8493-98.
EURUSD is starting to look very like April this year, when it broke above the converged 55 and 200-day MA's before peaking at 1.0885 and turning lower. This time the peak was at 1.0895 (just above the 76.4% pullback at 1.0891) and we have been heading lower for the last 6 trading days. A close under the 1.0789-1.0811 range, If seen, would be a strong suggestion that we can move lower still.
The one small caveat here which might suggest EURO is not a "relative underperformer" is European natural Gas Prices (TZT1) (As per my piece yesterday- This Gas Move Is No Laughing Matter) They have spiked almost another 5% again today and I have no doubt IF this continues that it is going to "Spook" Christine & Co. At the ECB and result in increased rhetoric about a move in June (too late to backtrack on that now) and then a pause.
TZT1 Has moved to a decisive new high in the rally breaking horizontal resistance and looking set to close the week above the 55-week MA for the first time since Dec 2022.
This suggests a danger of a move back up to strong resistance (possible double bottom neckline) at EUR56.10
The German 2-year yield has already made a new high in this move this morning and looks set to at least test the 76.4% pullback level at 3.12% above which (weekly close) 3.35% to 3.38% would become a danger again
The German 5-year yield also traded to a new high this morning with the 76.4% retracement close by at 2.67%. Above there (weekly close) and 2.93% comes into play again. The German 10-year yield continues to lag this move resulting in the 2's 10's curve flattening 12 bp's in the last 4 weeks.
As mentioned yesterday in my piece "Ominous" we have also made a potentially important break on the Japanese 10-year yield which if sustained on a weekly close basis (Above .92%-.996%) suggests a move towards resistance at 1.36%
BUT..the one I am most closely watching is the US 2-year yield and this level at 4.89%. A close above there would also be ominous as it would complete a double bottom that would target a marginal new high in the move at 5.07%
IF that level gives way then there is a real danger that the target on the 2's 5's chart of minus 42 gives way (pretty much hit yesterday.) IF so then a move back towards minus 48 and even MAJOR support at minus 53 to minus 54 is a danger.
Below minus 54 would be a complete game-changer here
None of the above scenarios augurs well for Gold/Commodities except maybe if the US level fails and the other moves continue thereby pressurizing the USD again.
Silver also got caught up in this "pain" trade yesterday (not surprising given it's recent outperformance- You need to monetise your winners not just cut your losers) and the good hold of major support on the Gold/Silver ratio at 74.59. When that level last held in Dec 2022 it resulted in a strong multi-month rally into March that ultimately led to a $150 fall in the Gold price and nearly $5 on the silver price.
Within that period the USD and US yields also moved sharply higher
Copper has also "plummeted" moving below $486.50 overnight. This suggests further losses are a danger with next good support at $469.10. In addition IF it closed below $468.60 on the week it would be a bearish outside week at the trend high. Since 2006 all new highs in Copper have been marginal with the suggestion that we could peak somewhere between $514 and $545 this time. The peak so far has been just under $520 and a weekly reversal, IF seen, may suggest that this rally is "done for now" giving us a setup somewhat like May 2008 (Which did not end well)
CL1 (WTI) has come close to good support at $76.70 to 76.89 overnight ($76.83) and bounced. I still suspect this support will give way enroute to the $74 target. Below $74, IF seen, starts to raise "red flags" of a potentially more significant fall
Right now, Equities do not care about any of this (More about NVDA it seems). That may change but hard to push back right now.
