- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Wednesday, 26 January 2011

Gold and Silver Targets

NQ closed just over the rectangle yesterday and has kept on moving up overnight. I'm expecting more upside and I have pattern targets of 2333 (rectangle) and (2339) falling wedge on NQ. If NQ was to reach the upper trendline of the broadening top that would require a move to 2400 which looks a very long shot from here and seems unlikely because ES would have to break the main rising wedge on the daily chart:
ES is now close to a new high, and is therefore considerably outperforming NQ of course, as well as many other lead indicator markets such as EEM. ES looks likely to make a new high today and I'm looking for a move to the 1310-1315 SPX level for SPX to touch the top of the rising wedge on the daily chart if SPX makes a new high today
EURUSD followed the support break yesterday with a new high. It has been a widow-maker for shorts recently. Oil also broke support on the five month rising channel, but is now bouncing. In the short term there's a steep falling wedge on oil that has broken up since I did the chart below. Short-term, that's therefore looking bullish, and should bounce a bit here. It's worth noting that the rising wedge target is for a return to the recent high, but there's strong resistance in the 88.3-88.5 area, and I'd expect this bounce to fail there:
I've been looking at gold and silver this morning, and a bounce here for both seems likely. Both have reached significant support levels and have touched support trendlines yesterday. On silver I have a very nice declining channel and two possible H&S patterns forming. We reached the neckline for the first of those possible H&S patterns yesterday:
On gold I have a falling wedge since the most recent high and it looks likely to bounce from the lower trendline which was hit yesterday. It didn't quite make it to my neckline target of 1315 and might yet do that before bouncing. I've sketched in a potential path if the H&S continues to form and then plays out.:

I'm definitely leaning long today. A gap fill looks possible, but after that I'm expecting equities to go up. If ES breaks below 1284 or NQ breaks below 2290 then the short-term bull scenario would look much weaker.

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