Weekend Update #2

CRUDE
Crude finished a 3 wave structure to the downside on Monday and then spent the remainder of the week going up in impulsive price action.

It appears that she is tracing a double zigzag for minute [b]. This means that the Monday low would be a minuette (x) wave. From that low, we should see an abc up of minuette degree to complete [b]. If this is the correct structure, we will see 7 waves.

It appears that the first leg, which is minuette (a) , has completed, as there is clearly 5 waves up that finished at the 74.31 H.

It is unclear if minor B will take the form of a triangle or not. It sure has the look and feel, as previously mentioned.

Upside targets include 76.30, which is the 61.8% projection of (a) and 78.93, where (c) = (a). Basis October contract.

The 2 bar daily projection comes in at 74.97. Basis continuous contract.

It should be noted that the combined contract made new yearly highs this past week.


DOLLAR INDEX
It appeared that all systems were a go on Monday. Turned out it was really a no-go, as the dollar got kicked around the rest of the week.

Where are we at now? Well, she better save herself fast if the 77.52 L was a bottom. You can make a decent case that structure has been tracing out an expanded flat.

That is my preferred count, unless the 77.52 low is breached. I really think the odds favor a break at this point, however, I will let price action determine that.

If the flat scenario is to play out, the dollar needs to start heading to the upside soon. There isn't much room for error down here.

From a bullish standpoint, it does appear that the (c) leg may have finished. This would complete minute [ii].

I don't know folks. For you poker players, we might be looking for maybe a 2 or 3 outer here. In other words - don't count on it.

GOLD
Monday had a big gap down, which appears to have saved me some frustration and money. If you recall from last week, I wanted to be short gold via puts.

Fortunately, I did not chase (see mid-line on chart). My plan at that point was to put on a short line with a backtest of the broken up-trend line. I came close to pulling the trigger on Wednesday, but thought there needed to be another leg higher.

Friday was another gap, this time over the trend line. Bottom line - no action for VO this week in the gold market.

I show two different counts. One is bullish, the other bearish, which is still my preferred at this point. I need to see price action take out the channel and the 974.30 H to change my opinion.

There is actually a third option that may very well be in play here. For the last two weeks I have talked about the possibility of a triangle tracing. Structure may have been telling us this all along with the slow choppy price action.

One thing is for sure, it is coiling up to bust a move. If a triangle, it measures 144.30, which targets up around 1075 (basis continuous).

If you play this market, I think the conservative thing to do is wait for a break of either the 994.50 H, or the 907.20 L to place a bet. If your aggressive, like me, you can use the 974.30 H and the 927.60 L. Or better yet, do your own due diligence and come up with a game plan.

Edit: There are 2 prices on the chart that are incorrect due to rollover. The 996.50 H and 930 L. I failed to change those as I put them on manually. It's been a long day and I'm not going to update the chart as it's a hassle.

30 YR BOND
As expected, the 30 yr had some unfinished business on the upside to complete an expanded flat.

Notice the near perfect 138.2% extension of [a]. This is a very common extension for an expanded flat. Friday finished with a very bearish candle and more importantly, did not take out 121'11.5.

If my assessment is correct, bonds should be heading lower over the next several weeks.

The first order of business is to take the channel. Then we need to see decisive price action through the 114'25.5 L.

3 = 1 at 114'17. The 161.8% projection of 1 sits at 110'18. This would be a more likely target, if not lower. Ultimately, I think we probably see par.

Watch price action closely as we get to the channel. As mentioned last week, this could turn a triangle.