Jul 122010

Pretty quiet this morning. Not much to report. Traders are trying to digest the ray of hope from the end week news and with nothing new the optimism seems to be holding. They tried to take it down for a test overnight and the line of support trying to develop in the low 60s seems to be relatively strong. We may see another probe down and this time maybe a more true test which hits 63 but if that holds it will show a lot of strength in the market. Friday we did have good relative institutional participation to the long side. Overall volume was light but that shows some good relative commitment. Overnight we continue to see large traders buying the lows and the center line though they have fallen off a bit just ahead of the open. We did see a brief rally in the EUR which has subsided and the carry trade has retraced to close to its overnight lows as well signaling a greater probability of some more low testing. The 2s are flat and we have seen gold come off a bit which shows further signs of longer term strength in the market. This will be a key week for economic news as we feel price is at a critical juncture right here. The high 70s is the last real developed intra-day support south of 1111 or so and of course the ever important 1092 is the long term line in the sand for the bulls and the bears. I would certainly expect we don’t break the major resistance highs and probably not the interim resistance in the mid 70s. Likewise I do thing we see another probe down but I don’t think we test the 50s today and will likely see a nice bounce off the 63 handle. If we do trade lower in the absence of news I think the 58 handle around the 24 hour S2 is a rock for the time being.

 Posted by at 8:57 am

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