Inter-market Technical Analysis using algorithmic pattern detection
THURSDAY SEPTEMBER 30, 2010 10:42:00 GMT
Spot gold is trading at $1315 an ounce as this is being written and is on its way to a target which was mentioned in this column in October 2009 of around $1340. Meanwhile the US dollar index is at its lowest level in eight months.
I believe that the end of quarter window dressing to try and break above $1150 on the S&P 500 is causing some extremely over-stretched conditions in the FX market which is all part of the effort to provide the most supportive backdrop to further gains for equities.
Somewhat tongue in cheek I made the following comments earlier this morning from my twitter account:
My hunch is that $GBPUSD has a run at $1.60, $EURUSD at $1.38, $AUDUSD at 0.98 and then its wile coyote time-which would also not be good for $SPX.
FX market seems really stretched against the dollar and there could be a big snap back in coming days.
End of quarter window dressing is causing some real tensions in FX which seem ready to break apart -perhaps even later today
The achievement of the $1340 target on gold, which arose in connection with the inverted head and shoulders pattern which took a couple of years to develop, could mark an exhaustion point in the outright hatred of the US dollar at present. October could be interesting.
A potential double top lies in wait for $GBPUSD.
As discussed here on Tuesday and on CNBC that afternoon, $AUDUSD could be facing a key inflection point.
The S&P 500 futures are currently at 1140 and if the window dressing exercise can be sustained today it would be not be surprising to see a rally up to 1150.
Meanwhile I shall be paying close attention to any ambushes/traps that are being set in the forex arena as we exit a very profitable September and open the books for Q4.
TRADE OPPORTUNITIES/SETUPS FOR THURSDAY SEPTEMBER 30, 2010
The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions.
None of these setups should be seen as specifically opportune for the current trading session.
For a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm