You know when it’s just too obvious, the markets do the opposite, right? Then again, using pivots as our guide, everything kinda makes sense. Take a look at Gold here for example….
What we see is that based on a Monthly R2, we essentially got there and the overbought condition it’s been in will now be basing again, working that overbought condition off. It’s natural, and right at predicted resistance for now.
As well, the Dollar is working off the opposite – an oversold condition. In fact, a six week base is in place and it looks like a retracement is under way. News and expectations were too obvious and too easy to trade off of, and price is again showing us the way.
I am now expecting a short selloff in equities and commodities as the Dollar gains strength. However, I don’t see much coming of it. Working off the incredible rally from late August a bit was needed long ago, and it may just simply be now is the time. Some key support worth watching on the /ES –
- 1200 – the nice round number
- 1180 – indicator support
- 1168 – monthly pivot
- 1150 – round number again, and just above the monthly S1 of 1142
If a decline occurs, it should be quick and decisive – and should catch a bid on any Dollar weakness, where the next decline should take us to the area of 71-74.
Trade the extremes and be safe! It’s only natural.